Declaring dividends often creates a current liability. True False

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Declaring dividends often creates a current liability. True False

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Answer 1

Answer #1

Whenever a company's declares stock dividend it creates a Dividend distributable which creates a liability for the company and once the dividend is paid in cash this liability is set off.

So yes when a company declares dividend it recognises a liability in the form of Dividend distributable account

So the statement is true.

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Answer 2

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Declaring dividends often creates a current liability. True False

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