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company's act 1956

(Querist) 11 September 2009 This query is : Resolved 
whether preference share dividend reduces accumulated profts ?riven
Raj Kumar Makkad (Expert) 13 September 2009
yes. certainly it reduces the accumulated profits of the company available for accounting for other heads.riven
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.

A. A. JOSE (Expert) 19 September 2009
Yes, I agree.riven

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