What will be treatment in cashflow statement if only dividend paid or provision made is given in adjustment. Also explain with proper reason what does it mean?
If dividend paid is given in question than it means
First effect:
Outflow of cash from financing activity
So it is deducted in financing activity.
Second effect:
It is added in net profit to ascertain net profit before tax and extraordinary item which reguired in beginning of operating activity
Note- if it is said in adjustment that
Interim dividend on equity share is 10 percent than
If preference shares are given at some rate so they also get dividend specified on them as they have preferential right
First effect:
Outflow of cash from financing activity
So it is deducted in financing activity.
Second effect:
It is added in net profit to ascertain net profit before tax and extraordinary item which reguired in beginning of operating activity
Note- if it is said in adjustment that
Interim dividend on equity share is 10 percent than
If preference shares are given at some rate so they also get dividend specified on them as they have preferential right