Dividends Payable

Dividends Payable is defined as the cash owed by a company to its stockholders, based on a distribution that has been formally authorized by the company's board of directors.  Once the board has approved the dividend, it creates a liability on behalf of the company.  Since this liability is generally due to stockholders within the fiscal year, dividends payable are found in the current liabilities section of the balance sheet.

Dividends payable that are in the form of shares of stock are not shown as current liabilities, since they do not require the use of an asset to pay for them.