Dividends

Dividends

1) Create a "Dividends Received" account in the "Other Income" section of the general ledger. Because the income received on the dividends is not related to the operations of your business, it should be reported in the "Other Income" section, separate from the normal operating income from your business.

2) Record the total amount of the check for dividends as an increase to the Checking account in the "Assets" section of the general ledger. Generally Accepted Accounting Principles (GAAP) considers an increase to an asset account a "debit."

3) Record the total amount of the check for dividends as an increase to the "Dividends Received" account. GAAP considers an increase to an extraordinary income account a "credit."