Proposed dividend 23000?
Dear Student
You wanted to ask as to why is Rs. 23,000 Proposed Dividend added to the Net Profit before tax. Right!
Here's the explanation:
Proposed Dividend means the dividend that has been proposed in the annual meeting of a company. This dividend is proposed and not approved by the shareholders yet and thus is a contingent liability of a company. This dividend is shown in Notes to Accounts.
It should be noted that:
Proposed dividend of the previous year is considered to be approved by the shareholders and thus has to be paid this year.
Therefore this dividend reduces our profit and hence added to Net Profit before tax to calculate Cash Flow from Operating Activities and subtracted from Financing Activity of a company as it leads to outflow of cash.
Dividend Proposed this year is not to be treated in any way and will be shown as a footnote in the Balance Sheet.
-Regards
You wanted to ask as to why is Rs. 23,000 Proposed Dividend added to the Net Profit before tax. Right!
Here's the explanation:
Proposed Dividend means the dividend that has been proposed in the annual meeting of a company. This dividend is proposed and not approved by the shareholders yet and thus is a contingent liability of a company. This dividend is shown in Notes to Accounts.
It should be noted that:
Proposed dividend of the previous year is considered to be approved by the shareholders and thus has to be paid this year.
Therefore this dividend reduces our profit and hence added to Net Profit before tax to calculate Cash Flow from Operating Activities and subtracted from Financing Activity of a company as it leads to outflow of cash.
Dividend Proposed this year is not to be treated in any way and will be shown as a footnote in the Balance Sheet.
-Regards