Company dreamhigh pvt. limited wants to distribute dividend to its shareholders. there are two types of dividend, which a shareholder can receive in any accounting year. discuss the term dividend, its types, accounting treatment of dividend in the books of accounts and a brief towards how cash flow on account of dividend is reflected in the cash flow of a company?
Question: Company dreamhigh pvt. limited wants to distribute dividend to its shareholders. there are two types of dividend, which a shareholder can receive in any accounting year. discuss the term dividend, its types, accounting treatment of dividend in the books of accounts and a brief towards how cash flow on account of dividend is reflected in the cash flow of a company?
Dividend is a payment made by a company to its shareholders out of its profits or reserves. There are two types of dividends: cash dividends and stock dividends. Cash dividends are paid in cash to the shareholders, while stock dividends are paid in additional shares of the company's stock. The accounting treatment of dividends involves debiting the retained earnings account and crediting the dividends payable account when the dividend is declared, and then debiting the dividends payable account and crediting the cash account when the dividend is paid. The cash flow on account of dividend is reflected in the cash flow statement as a cash outflow from financing activities.
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