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Hi, could you please help me with an overview of accounting for dividends? I am confused regarding accounting for ordinary dividends, preference dividends…dividends payable, dividends paid…etc. Do u have an overall summary or something like that?
Thank you in advance, s.No – I don’t have a summary.
If the directors have proposed a dividend BEFORE the year end ( payable after the year end ) it should be shown as an appropriation in the SOCIETY and a liability in Current Liabilities.
If it’s declared AFTER the year end, it’s a non-adjusting subsequent event and should be disclosed in the notes to the fin stats, but NOT included as a liability.
Pref divs are shown as a finance charge in arriving at profit before tax.
Does that help?
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