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Hello!
I have my F3 CBE tomorrow and I am getting a little confused with Dividends and how they are shown in Financial Statements.
Am I right in thinking that they only show in the SOCIE and Cash Flow? Is there a difference in how ordinary share and preference shares are reported in these statements?
Any help would be wonderful!
Thanks
Hi Vicki
I will summarise the ‘rules’ for you:
1 Any dividends that have been paid during the year appear in the SOCIE and Statement of cash flows only.
2 Any proposed ordinary dividend appears nowhere (because it has not been voted on and is therefore not ‘certain’).
3 Any ordinary dividend that has been declared before the year end, but not paid, appears in the SOCIE and Statement of financial position (as a current liability) – this is because it is ‘certain’.
Finally,
4 In the SOCIE it is the total preference dividend for the year that appears, whether it had all been paid or not. If it has been paid then it is also in the Statement of cash flows. If it had not yet been paid, then it is a current liability in the Statement of financial position. (This is because they are fixed dividends and so it is ‘certain’).I hope that is all clear, but do ask again if not.
Best of luck tomorrow 🙂
Thank you! That is so helpful!! I was trying to read back over my study text but I just couldn’t find a definitive answer, so this has really helped.
I am hoping that I won’t get many questions on this but it’s best to be prepared!!
🙂
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