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Dividends and Dividend Preferences definitions

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  • Declaration Date
    The day a company publicly announces a dividend and records a liability for the amount to be paid.
  • Record Date
    The cutoff day determining which shareholders are eligible to receive the declared dividend.
  • Payment Date
    The day when the company distributes the dividend to shareholders and settles the liability.
  • Dividends Payable
    A liability account representing the amount a company owes to shareholders after declaring a dividend.
  • Preferred Stock
    A class of stock with priority over common stock in receiving dividends, often at a fixed rate.
  • Common Stock
    A class of stock representing ownership in a company, receiving dividends after preferred stockholders.
  • Dividend Preference
    A policy ensuring preferred shareholders receive their dividends before any are paid to common shareholders.
  • Par Value
    The nominal or face value assigned to a share of stock, used to calculate preferred dividends.
  • Dividend Rate
    The fixed percentage of par value that determines the amount paid to preferred shareholders.
  • Retained Earnings
    The portion of equity reduced when dividends are declared, representing accumulated profits not distributed.
  • Board of Directors
    The group responsible for authorizing and declaring dividends on behalf of a company.
  • Outstanding Shares
    The total number of a company’s shares currently held by all shareholders, used in dividend calculations.
  • Journal Entry
    An accounting record made to document the declaration or payment of dividends in the company’s books.
  • Liability
    An obligation recorded when a dividend is declared, representing the company’s duty to pay shareholders.
  • Equity
    The ownership interest in a company, reduced when dividends are declared and distributed.