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When a corporation declares and pays a dividend, the dividend does not reduce the current accounting period's profit reported on the income statement. In other words, a dividend is not an expense.
Dividends will reduce the amount of the corporation's retained earnings. Retained earnings are reported in the stockholders' equity section of the balance sheet.
If a corporation has very profitable uses for its cash, its future profits might be less if it pays dividends instead of reinvesting the cash dividend amounts into profitable projects.
Wiki User
∙ 13y ago
Wiki User
∙ 10y agoDividend is that part of profit which is distributed to the share holders of company so it reduces the amount of profit which is shown in balance sheet as retained earnings but as dividend is declared after closing of fiscal year and after calculation of profit so it does not reduce the profit of the business.
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Does a dividend reduce profit?
Dividend does not reduce profit.
What does a shareholder qet when a dividend is paid?
A shareholder gets a portion of the companies profits when a dividend is paid.
What does a shareholder get when dividend is paid?
A share of a company's profits
What does dividend?
a small section of anything
What is divisible profit?
The profits available for the distribution among the shareholders of a company as dividend are called divisible profits.
What does dividend dynamics mean?
what causes a company's dividend rise faster than it's own profits dictate.
What is the relevance of dividend cover if dividends are paid out of distributable profits?
Because dividend cover represents the amount of times by which dividends can be paid by profits. i.e. the company's ability to pay it's dividends. The higher the dividend cover the greater the ability of the company to pay dividends out of it's distributable profits. Dividends according to companies act legislation can only be paid out of distributable profits hence the relevance of dividend cover represents the companies ability to pay their dividends.
What is a divedend?
A dividend is a portion of the companies profits paid to it's Stockholders.
What does the size of the dividend per share of stock depend on?
the corporation's profits
The part of the profits that are paid to shareholders is called?
They are called dividends.
Dividend Payments?
Corporations have shareholders that invest in their business and expect a portion of the business's profits in return. Dividend payments are part of the shareholders' returns for investing in a business. Corporations have a choice to either reinvest their profits in shares, or keep a portion of the profits and paying shareholders dividends.
What is the effect of a stock dividend on a corporation's stockholders'equity accounts?
The stock Dividend is more or less profit sharing. When a dividend paying company is profitable they pass along those profits to the shareholders in the form of a dividend check.
