Dividends as a liability

[Paul A.]

I never heard of treating dividends as a liability, but it makes a lot of
sense and seems to provide a nice way out of the accounting conundrum I
encountered.  Moving the dividend amount from equity (retained earnings,
probably) to a liability avoids expensing it -- and paying the dividend
decreases the liability by the amount of the dividend, while keeping the
transaction off the expense list and avoiding an indefinitely accumulating
dividend account.

If profit gets moved over to retained earnings, then the retained earnings
are split into two pieces: what the proprietor keeps in reserve for the
future and what the proprietor extracts from the business.  That's a natural
way to look at it.  I suppose I could have done that in Quicken also, but I
didn't think of it then.
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