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Hi John,
I have the followiig question about cash flow and I don’t understand why the answer in exam kit is 20000 $.
Extract from balance sheet:
30.09.2004 – approved ordinary dividends – 20000$
30.09.2005 – approved ordinary dividends – 25000$How much will appear in the statement of cash flow for the year ended 30.09.2005, for ordinary dividends paid?
tahnk you,
Camelia
At 30.09.2004, if the dividends appeared in the Statement of financial position then it would be as a liability because they had not been paid – they will be paid during the following year (year to 30.09.2005) and therefore they would appear in the statement of cash flow at 20,000 because that is the cash that will have been paid.
(The 25,000 from 30.09.2005 will not appear in the Statement of cash flow because it was still owing at the end of the year and therefore no cash had been paid)
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