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Explain why dividends are not reported on the income statement.

Explain why dividends are not reported on the income statement.

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Answer #1

Dividend payments to the shareholders are not mandatory payments in nature so they are not reported as operating expenses for the company and they are subject to changes at regular intervals according to the need and business structure of the company so these dividend are not to be recorded into the income statements of the company

Dividends are non operating in nature and they are also non-mandatory payments on the part of the company so, the expenses of dividend are not mandatory in nature and they are not operational either, so it can be summarised that dividend are not a part of the operational expenses of the company and hence they are not to be included into the income statement of the company

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