Dividends Declared After the Balance Date but Before the Financial

question 18

Multiple Choice

Dividends declared after the balance date but before the financial statements are authorised for issue:

• A) meet the criteria for recognition as a liability;
• B) satisfy the criteria for recognition as an expense;
• C) are recognised in the Statement of Financial Position as they meet the definition of equity;
• D) do not meet the IAS 37 criteria of a present obligation.

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Definitions:

Accounts Payable

The amount a company owes to suppliers or vendors for goods or services received but not yet paid for.

Debit

An entry recorded on the left side of a bookkeeping ledger for a transaction that increases asset or expense accounts, or decreases liability, equity, or revenue accounts.

Sales Tax Payable

A liability account that records the amount of sales tax collected from customers, which is owed to the government.

Normal Balance

Represents the side (debit or credit) of an account that increases its value, based on the double-entry accounting system.