Accrued dividend, Financial Management

It is an accounting term which refers to the balance sheet item that accounts for dividends that have been confirmed but not yet given to shareholders. Accrued dividends are taken as a liability from the declaration date and stays such until the dividend payment date.    

Accrued dividends must not be confused with accumulated dividends, which refer to dividends owing to holders of cumulative preferred stock. 

There are no accounting rules and regulations that mandate a time frame in which the accrued dividend entry must be recorded, however most companies generally book it some weeks before the payment date. After the dividend is declared, it turn into property of the record-date shareholder and is taken separate from the stock. This separation permits the shareholders to become creditors of the company, due their dividend payment, must a merger or some other corporate action takes place.

Posted Date: 7/27/2012 8:00:08 AM | Location : United States

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