Question

What is the major accounting difference between interest incurred during a period and cash dividends declared during the same period?

Answer 1

Answer:

Dividends are a distribution of a corporation's earnings to its stockholders. ... Interest on bonds and other debt is an expense of the corporation. The interest expense will reduce the corporation's net income and its taxable income.

Answer 2

Answer:

• Dividends are where earning of corporations are distributed to the stockholders and dividends are not an expense.

• They are nor reducing the net or taxable income.

• Interest on the bonds on the other hand is considered as a debt and is also considered as an expenditure for the corporation.

• Interest expenditures is reducing net income of the corporation and this is the difference.