Dividends are payments made to shareholders (owners) of a company. Dividends can only be paid if overall income has been positive otherwise it payment would constitute a return of investment.
On the Balance Sheet, dividends are listed in the Equity/Retained Earnings section.
Since balance sheets report only ending account balances of a specified time, Cash and Retained earnings express amounts from past dividends. The type of dividend and the way it is paid out has a lot to do with the way it appears on a balance sheet. Cash dividends are paid out in cash. Stock dividends are paid out in the form of stocks. Property dividends are paid out in the form of assets.
If dividend payable then liability if dividend receivable then it is asset if dividend paid then it is not part of balance sheet.
A cash dividend reduces cash (asset, debit on balance sheet) and reduces retained earnings (part of equity, credit on balance sheet).
Dividend payable become liability for business as soon as it declared to be paid and all future liabilities are part of balance sheet so dividend payable also shown under liability section of balance sheet and not part of income statement.
balance sheet current liabilites
Dividend payable is classified as liability as soon as dividend is declared in liability side of balance sheet.
No a dividend is not an expense. It is generally a reduction of retained earnings in the equity section of the balance sheet.
reserves surplus
dividend will affect the cash flow when actual cash is paid and not at the time of declaration of dividend.
Yes, a cash dividend affects the balance sheet by decreasing retained earnings and increasing liabilities. It is treated as any other cash payment to another party.
Cash dividend paid is not shown in balance sheet rather it is shown in cash book or cash outflow in cash flow statement under cash from financing activities.
Yes income in balance sheet is the same amount which is calculated in income statement if there is any difference then it may be due to distribution of net income between retained earnings and dividend.
Answer:Net income is added to equity (retained earnings) at the end of the year. The end of year balance sheet can be presented either before and after profit appropriation. Before profit appropriationWhen the balance sheet is made before profit appropriation, net income will be included as a item on the balance sheet in the equity section. In case net income is a loss, this amount will be negative. This is the situation that the question refers to (a loss is shown on the balance sheet).After profit appropriationWhen the balance sheet is made after profit appropriation, net income is not shown as a separate item on the balance sheet under equity. Depending whether or not a dividend is paid, net income will show up as a dividend payable, or will be added to a reserve (for example, retained earnings). In case of a loss, it will be subtracted from a reserve.