Definition of Dividend
A dividend paid by a corporation on its common stock is a distribution of the corporation's net income (earnings, profits). The dividend is not an expense or a loss. Therefore, the dividends declared and/or paid are not part of the calculation of the corporation's net income that is reported on its income statement .
Example of Dividend Reporting
While dividends do not reduce the corporation's net income reported on the income statement, the dividends do reduce the corporation's retained earnings and stockholders' equity . The dividends are reported on the corporation's statement of stockholders' equity , one of the required financial statements which summarizes the changes in stockholders' equity.
