When proposed dividend made or paid during the year is given in adjustment then what does it imply Why - Accountancy - Cash Flow Statement

Question

When proposed dividend made or paid during the year is given in
adjustment then what does it imply? Why it is given in adjustment
inspite it is already given in balance sheet showing the amount of
current year and past year?also explain the proposed dividend a/c

Neha Chopra · Accepted Answer

Dear Student

In the balance sheet, proposed dividend made or paid is not given,
the Balance sheet shows that Account balance of proposed dividend
in the books of accounts The addition or Deletion in that account
which is required for preparing cash flow is not given in the
balance sheet, therefore we require additional information
However, if no additional information is given regarding the same
we assume that the opening balance of proposed dividend is paid in
cash and the closing balance is the amount we have charged from
profit and loss account for the declaration of the dividend of the
current year

Now, e g of adjustment say:
1 Proposed dividend paid Rs 50,000/- - means Rs 50,000 outflow of
cash in the form of dividend payment of last year
2 Proposed dividend made Rs 50,000 means Rs 50,000/- proposed
dividend liability is created by charging it from profit and loss
account

Hope this helps
Regards

When proposed dividend made or paid during the year is given in adjustment then what does it imply? Why it is given in adjustment inspite it is already given in balance sheet showing the amount of current year and past year?also explain the proposed dividend a/c.