Accrued Dividend


DEFINITION of 'Accrued Dividend'

An accounting term referring to the balance sheet item that accounts for dividends that have been declared but not yet paid to shareholders. Accrued dividends are booked as a liability from the declaration date and remain as such until the dividend payment date.

Accrued dividends should not be confused with accumulated dividends, which refer to dividends due to holders of cumulative preferred stock.

BREAKING DOWN 'Accrued Dividend'

There are no accounting rules that mandate a time frame in which the accrued dividend entry should be recorded, though most companies usually book it a few weeks before the payment date. After the dividend is declared, it becomes property of the record-date shareholder and is considered separate from the stock. This separation allows the shareholders to become creditors of the company, due their dividend payment, should a merger or some other corporate action occur.

  1. Record Date

    The cut-off date established by a company in order to determine ...
  2. Balance Sheet

    A financial statement that summarizes a company's assets, liabilities ...
  3. Dividend

    A distribution of a portion of a company's earnings, decided ...
  4. Declaration Date

    1. The date on which the next dividend payment is announced by ...
  5. Merger

    The combining of two or more companies, generally by offering ...
  6. Liability

    A company's legal debts or obligations that arise during the ...
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