Question : Adjustment for Proposed Dividend in Cash flow statement is :
Option 1: Add the previous year’s proposed dividend under net profit before tax and extraordinary items anddeduct it under Financing Activity.
Option 2: Add the current year’s proposed dividend under net profit before tax and extraordinary items and deduct previous year’s proposed dividend under Financing Activity.
Option 3: Add the current year’s proposed dividend under Net Profit before Tax and Extraordinary Items and deduct current year’s proposed dividend under Financing Activity
Option 4: None of the above
Correct Answer: Add the previous year’s proposed dividend under net profit before tax and extraordinary items anddeduct it under Financing Activity.
Solution : In order to calculate net profit tax and extraordinary items in the cash flow statement, the proposed dividend from the prior year is added back. As an outflow in finance activity,
Hence the correct answer is option 1.
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