Question

Proposed dividend is shown as current liabilities in balance sheet but why do we show in p/l a/c?

Answer 1

Dear Student


The journal entry for the declaration of proposed dividend is passed through profit and loss account only, therefore it is shown in profit and loss account.

Journal entry:

Journal in the books
Date	Particulars		Debit	Credit
	Profit and Loss A/c	Dr.	xxx
	To Proposed Dividend A/c			xxxx
	(Being dividend proposed shall be paid on approval form shareholders)

Regards