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A liability for dividends is created O at the date of declaration, at the end of each fiscal year
A liability for dividends is created O at the date of declaration, at the end of each fiscal year. at the date of payment. at the date of record.
Expert Solution
Option A at the date of declaration is the correct answer
Explanation :-
When the company declares the dividend it becomes a liability for the company and the company records this liability by debiting the retained earnings account and crediting the dividend payable account. Hence option A is the correct answer.
Option B is incorrect as it is not necessary for the company to give dividends at end of each fiscal year.
Option C is incorrect as on the date of payment liability is extinguished not created.
Option D is incorrect as the date of record decides the shareholders to whom such dividend is to be given and hence no relation with liability for dividends.
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