how we will treat dividend equilisation fund of opening and closing year ?
Dividend Equalisation Fund is like various other reserves of the company. It is a part of profit kept aside by the company to distribute stable dividends to its shareholders' each year. While preparing Profit and Loss A/c it is deducted from Net Profit as it leads to reduction of Profits. However, it is a mere appropriation of profits, therefore, increase in the balance of this fund is added to Net Profit before Tax and Extraordinary Items (under Cash Flow From Operating Activities).