Question : Interim dividend is added to determine_____________.
Option 1: Net profit before tax and extraordinary items
Option 2: Net profit after tax and extraordinary items
Option 3: Operating profit before change in working capital
Option 4: None of the above
Correct Answer: Net profit before tax and extraordinary items
Solution :
Answer =
net profit before Tax and extraordinary items
Interim Dividend: It is declared (approved) by the Board and paid within seven days of it being declared.
It is added to determine Net Profit before Tax and Extraordinary Items because it is an item of Financing Activity, and payment thereof is shown as an outflow of cash under Financing Activity.
Hence, the correct option is 1.
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