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CBSE Class 12-commerce Answered

should i consider proposed dividend for current year or previous year while calculating net profit before tax in cash flow statement
Asked by rohitvinod5174 | 15 Jan, 2019, 06:53: AM
answered-by-expert Expert Answer

The effect of proposed dividend on Cash Flow Statement is as follows:

i. proposed dividend for previous year is shown as an outflow of cash assuming that the shareholders have approved the proposed dividend;

ii. proposed dividend for current year is not given any effect as it is not provided for.
Accordingly, amount of proposed dividend for the previous year given in the question will be added back to the net profit to compute the cash flow from operating activities. This amount of dividend will then be reduced from financing activities as it is considered as an outflow.

Answered by Surabhi Gawade | 15 Jan, 2019, 02:58: PM

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