What Is "Dividends Paid" Recorded on Accounting Books?

Save
Next Video:
What Are the Accrual Bases That Accounting Recognizes?....5

Dividends paid are a share of what would be an after tax profit from a given company. Learn more about "dividends paid" on accounting books with help from a banking and financial expert in this free video clip.

Part of the Video Series: Accounting FAQs
Promoted By Zergnet

Comments

Video Transcript

Hi, I'm Lori Greer from Atlanta, Georgia and I'm here to answer the question. What is dividends paid recording on the accounting books? Dividends paid is basically a share of what would be an after tax profit from a given company. This will be distributed to it's share holders according to the number and the class of shares held. While larger companies typically distribute dividends on a quarterly basis, smaller companies on the other hand will distribute dividends at the end of their accounting or fiscal year. A company's board of directors will make the decision of what the amount is and when dividends would be paid. They also determine whether it's paid out of the company's current earnings or the past earnings that is held as a reserve. Any holders who have preferred stock in the company will be paid at a fixed rate and will be paid first whereas the holders or ordinary shares are entitled to receive any amount of dividends. This is based of the level of profit and the company's need for expansion or other purposes. Normally all dividend payments are taxable often at the source and is usually forbidden to be paid from dividends out of anticipated, but not yet received or unrealized profits. I'm Lori Greer from Atlanta, Georgia and we just answered the question. What is dividends paid and how it is recorded on the accounting books?

Featured

Related Searches

M
Is DIY in your DNA? Become part of our maker community.
Submit Your Work!