A Dividend Declaration is a proper declaration made by an organization that it will deliver profits to specific classifications of its investors.
The choice to deliver profits is constantly made by the Board of Directors through a goal passed under the organization's Memorandum and Articles of Association. This Board Resolution would likewise determine the time period and the sum that will be delivered as profits.
In bookkeeping terms, a Dividend Declaration brings about a Debit in the Retained Earnings account and a credit in a new 'Profits Payable' account. While Retained Earnings are resources, profits that should be paid sometime not too far off, are a responsibility.
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