company's act 1956

manoj (Querist) 11 September 2009 This query is : Resolved
whether preference share dividend reduces accumulated profts ?riven

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Raj Kumar Makkad (Expert) 13 September 2009
yes. certainly it reduces the accumulated profits of the company available for accounting for other heads.riven

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KUMAR JAGADEESAN (Expert) 14 September 2009
Yes. Definitely. A divided ( whether on equity or preference share)is only a distribution of profit and will thus reduce the balance available in the accumulated profits.

The following accounting entry is passed in the P&L appropriation a/c.
Pr ofit & Loss A/c Dr
To Dividend payable/provision for dividend.

Cash payments subsequently made would be set off against the provision for dividend or dividend payable a/c.

J.KUMAR
Hyderabadriven