While preparing the Cash Flow Statement, adjustment for Proposed Dividend is :

CS Executive · Corporate and Management Accounting · PYQS · June 2023
While preparing the Cash Flow Statement, adjustment for Proposed Dividend is :
(A) Add the previous year's proposed dividend under net profit before tax and extraordinary items and deduct it under Financing Activity
(B) Add the current year's proposed dividend under net profit before tax and extraordinary items and deduct the previous year's proposed dividend under Financing Activity
(C) Add the current year's proposed dividend under Net Profit before Tax and Extraordinary Items and deduct the current year's proposed dividend under Financing Activity
(D) Add the current year's proposed dividend under net profit before tax and extraordinary items

Answer & Explanation:

Correct Answer: Option (B)

Official answer key: (B), (D). Official source note: Option B is correct assuming previous year proposed dividend were actually paid, then it will be deducted from financing activities. Option D is correct assuming previous year proposed dividend not actually paid.

Topics: Financial Statement Analysis

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