00:01
Xyz company has a $20 ,000 of dividend in areas.
00:08
Based on this information, which of the following statements are false? so they have a $20 ,000 dividend in areas.
00:22
The first option is that dividend in areas are not considered to be liabilities.
00:40
For this case, this question, this option would be true.
00:44
You wouldn't be false because dividend in areas are not classified as liabilities because they represent a past event, which is unpaid.
00:54
Something that's in areas is telling you that it's unpaid dividend and you know, they don't create a legal obligation for the company to make future payments and liabilities typically arise from the present obligations that require future sacrifices of benefits.
01:13
So it won't be considered as liabilities.
01:17
The second option is that an obligation for dividend in areas only exists after the board of directors declares payment.
01:36
An obligation for dividend in areas only exists after the board of directors declares payment.
01:51
This statement will be true also because the board of directors has the authority to declare dividends and determine how and when the payments will be made to shareholders.
02:09
So until the board of directors declares the payment of dividend in areas, there will be no obligation on the company to make this payment.
02:17
So the option will be true...