Difference between revisions of "Account for Dividends Paid"
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As companies earn profits, they can choose to either reinvest those profits in the company or distribute them to shareholders in the form of dividends. This is not a requirement (except in the case of certain "preferred" shareholders), but some companies pride themselves and create trust in their shareholders by issuing dividends on a regular basis (monthly, quarterly, or annually). Others may simply issue dividends after a particularly strong quarter or year. When the board decides to issue dividends and when the dividends are actually paid are recorded as transactions in the company's books.<ref name="rf1">http://www.investopedia.com/exam-guide/cfa-level-1/financial-statements/accounting-dividends.asp?header_alt=false</ref> How exactly these events are recorded is relatively simple, but depends largely on the type of dividend being issued. | As companies earn profits, they can choose to either reinvest those profits in the company or distribute them to shareholders in the form of dividends. This is not a requirement (except in the case of certain "preferred" shareholders), but some companies pride themselves and create trust in their shareholders by issuing dividends on a regular basis (monthly, quarterly, or annually). Others may simply issue dividends after a particularly strong quarter or year. When the board decides to issue dividends and when the dividends are actually paid are recorded as transactions in the company's books.<ref name="rf1">http://www.investopedia.com/exam-guide/cfa-level-1/financial-statements/accounting-dividends.asp?header_alt=false</ref> How exactly these events are recorded is relatively simple, but depends largely on the type of dividend being issued. | ||
| − | [[Category:Accounting and Regulations]] | + | [[Category: Accounting and Regulations]] |
==Steps== | ==Steps== | ||
