November 8, 2008
Does a balance in dividends payable account appear on the cash flow statement?
Can you answer Lucy's question about cash flow?:
If there were a balance in a company's dividends payable account at the end of the year, would this appear in the operating activities category of the cash flow statement? Why, or why not?
If there were a balance in a company's dividends payable account at the end of the year, would this appear in the operating activities category of the cash flow statement? Why, or why not?
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Comments on Does a balance in dividends payable account appear on the cash flow statement? »
No. Only actual amounts paid get reported in the cash flow statement. Let's say you declared $100,000 dividends. You
Dr Dividends $100,000
Cr Dividends payable $100,000
At this stage, nothing gets reported in the cfs. If you pay $50,000, you
Dr Dividends payable $50,000
Cr Cash $50,000
At this stage, you would report a cash outflow under financing activities for dividend paid. The balance in the dividend payable just stays at that balance until the amt is really paid off when you report it again in the cfs.