What condition must be met for a dividend on stock to be considered payable?

For a dividend on stock to be considered payable, there must be a clear distinction in ownership between the stock and the unpaid dividends. This means that once a dividend is declared by the company's board of directors, it becomes a liability for the company, and the shareholders are entitled to receive it. The separation indicates that even though dividends are tied to stock ownership, they are accounted for separately until they are actually distributed.

When a dividend is declared, it creates an obligation that is independent of the stock itself, which is why this separation in ownership is crucial. The declaration of the dividend assigns it as a payable amount to the shareholders, and until payment is made, it remains distinct from the shares. In this manner, shareholders have a clear right to that economic benefit, independent of their stock ownership.

This clarity is integral in accounting for dividends, ensuring that shareholders can anticipate their payments and that companies can manage their financial obligations effectively. Other options involve misunderstandings about the nature of dividends and their relationship with stock ownership, which do not accurately reflect the essential condition that classifies a dividend as payable.