[GNC] [GNC-dev] Recording dividend payoffs

[Maf. King]

On Wednesday, 17 April 2019 00:35:15 BST Christopher Lam wrote:
> I suspect there's vocabulary issue here.
> 
> Justin are you talking about Dividends whereby the business owner (with
> shareholders) sends monies to shareholders? I don't know how to book these
> transactions. Asset:Bank -> Expenses:Dividends?
> 

That one.

That's how I do it, but OP has been using a reference text online which says 
quite forcefully that Dividends Paid are not an expense, because expenses are 
temporary account(s) used to calculate a year's profit.  

Dividends are paid out of taxed profits, not trading expense accounts.

Said text goes on to explain that the act of declaring a dividend to be 
payable creates a liability account on the company.  When dividends are paid, 
that liability account is cleared from equity:retained Earnings (presumably 
company bank balance also reduces, but I haven't thought at length about what 
the 4th balancing account would be in a GC txn).  

I think that the OP's point is that if you close the books & have a retained 
earnings account, the reports which calculate & show retained earnings on the 
fly don't pay attention if there is already an Equity:RE account in the 
datafile.

Blame GAAP!

Maf.