What Are Dividends Declared on a Balance Sheet?

What Are Dividends Declared on a Balance Sheet?

Cash Dividends Declared is a temporary account on the balance sheet where common stock dividends are listed in the period in which they are declared, as defined by Accounting Coach. When the company pays out the dividends declared, then the account is emptied and removed from the balance sheet.

According to Accounting Coach, The Cash Dividends Declared account is a debit entry on the balance sheet, with a credit entry for the funds being placed into the current liability account, Dividends Payable. The current liability account may also be debited against the Retained Earnings account along with the Cash Dividends Declared account to show earnings that will be placed back into the company treasury instead of being paid out directly to shareholders.