Dividends Payable

Dividends Payable is the amount of the after tax profit a company has formally authorized to distribute to its shareholders, but has not yet paid in cash. In accounting, dividends payable is a liability on the company's balance sheet.

Let's say a company has 1,000 outstanding shares. The company declares a $1 dividend to stockholders to be paid in exactly one month from now. The company records a credit of $1,000 to its dividends payable account of liabilities until the dividend payment date.