Question

Which of the following items is not an appropriation of profit for a limited company?

• A. Preference shares dividend payable by the company.
• B. Ordinary dividend payable by the company.
• C. Income tax payable by the company.
• D. Debenture interest payable by the company.

Answer 1

The correct option is D Debenture interest payable by the company.

Interest paid on debenture is a liability and it is fixed in nature. In case of dividends it is not fixed in nature to pay. Dividends are appropriation of profits earn by the company on the other hand debenture is a long term liability of a company and its interest is expense not appropriation of profits.