What is Dividend?

When an investor invests his money in shares, it will be the source of the company who issued the shares. That company gives some part of profit to all shareholders or investors who invested their money in company’s shares. Part of company’s profit which is given to shareholder is called dividend. Except cumulative pref. shares, company will not give dividend to equity and pref. shareholders, if company has not earned profit.

Dividend is reward of sacrificing the money which is paid by shareholders in the form of shares. Shareholders have right to get dividend but they can not fix the amount of dividend because there are many factors which affects the rate of dividend. Sometime company may interested for ploughing back of profit, at that time shareholders can not demand for dividend.


If dividend is fixed, then it is the responsibility of accountant to show it in profit and loss appropriation account. This account is opened after making the profit and loss account for giving dividend and other adjustments. Accountant will pass the following adjustment entries.




Because, proposed dividend is not given so, it is liability of company to pay. So, its account will be credited and it will go to balance sheet of company. If company declares and paid dividend in the end of year, then following entry will be passed.



At this time dividend account will be closed after transfer to profit and loss appropriation account and payment amount will be deducted from bank account in balance sheet.


FAQ relating to dividend


Q: - 1 Is it possible, company has earned profit but board of directors did not declare dividend?



Ans: Yes, it is possible that company has earned the profit and its board of directors did not declare dividend because, board of directors think that if company will issue the dividend, it will disturb the financial position. At that time, they understand what is the better and they decide not to declare dividend.


Q:-2 In Which proportion is dividend given?



Ans. Dividend is given in the proportion of paid up capital



For example, suppose, paid up capital is $ 100000 and rate of dividend is 15%, then value of dividend

15/100 X 100000 = 15000



Q: - 3 What is simplest definition of Dividend?



Ans. Corporate earning and profits not retained in the business and when distributed among shareholder are known as dividend.



Q: - 4. Is dividend given on calls in advance?



Ans. No, because shareholders are given interest on calls in advance and this amount is just loan to company before the date, when amount of call is payable by shareholder .For that time calls in advance will be adjusted with payable amount of calls. From that date it will be included in paid up capital.



Q: - 5 Is dividend given on Call in Arrears?



Ans. No, because it is not the part of paid up capital. It means that it is which company has demanded but not received. So, it is like debt to shareholder and company has right to get 5% annual interest on this amount from shareholder.


COMMENTS

Comments on this Website
.
Share above Content to Your Friends



Name

access account accountant Accounting accounting definitions accounting ebook Accounting education accounting procedure accounting process outsourcing Accounting Software advance advertising africa Amalgamation amendments announcements Annuity assets audit auditing Australia B.Com. balance sheet bank Bank reconciliation banking basic accounting BBA benefits best bill black money blog bloggers book keeping bookkeeping Branch Accounting - full tutorial budget Budget variance business businessman CA calculator canada capital capital budgeting career cash cash book cash flow statement Chiense children china class coaching coins college commerce commerce students company computer computer accounting conference Contact vinod kumar corporate accounting cost cost accounting cost center cost centre CPA credit credit card cs currency data Debit and credit debit cards debt debtor degree depletion depreciation documents dollar domain Downloads Dubai e-accounting earning education Education Loans email employee EPF ERP euromoney examination excel excise duty expenses facebook factor of loan fans feature fifo FII fiji finacle finance Financial financial accounting fire insurance flickr flow forensic forex formula france fraud free fun function fund GAAP GDP gdr germany gold goodwill goodwill accounting google google apps google apps google base google buzz google calendar Google docs google finance google fusion tables google talk govt. GST guide health Hindi Hindi Language history holding company How to treat FBT in Tally 9 HRA ICAI ICAWI ICICI Bank IFRS income income statement Income Tax India indian railway Indonesia inflation inflation accounting infographics information inspiration insurance insurance accounting interest international Internet Introduction of Tally 9 inventory investment invoice IT Japan Job costing journal entries Kalculate keyboard kindle kuwait laptop law LBT learning lease lecture ledger leducation Leverage Analysis liabilities lifo linkedin loan logical point loss loss of profit M.Com. m.phil malaysia management accounting manual accounting manufacturing account market marketing mastercard material MBA MCA media migration mobile money ms word ms. excel multi currency in tally 9 Multicurrency Accounting mutual fund national security new and sacrifice ratio new york times new zealand news NGO nonprofit-accounting North Georgia Mountains NPV NSE odbc office oman online application online accounting otcei pakistan parents pay pal pdf pie chart pie chart of income pnb podcast ppf presentation price privacy policy prize money prof. vinod kumar profit profit and loss account project management provision purchase puzzles quickbooks Quote quotes quotes of svtuition rating agency ratio analysis RBI readers real estate rectification of errors remote control reports reserves responsibility accounting retirement revenue Revenue reserves review risk rupees salary sale saudi arabia saving sbi scholarship school SEBI security service tax share share trading Shares shri lanka singapore sms social accounting society solution South Africa stock stock exchange structure student students study subsidiary company svtuition swiss bank tally tally 9 Tally 7.2 Tally 9 Tally.ERP 9 tanzania tax Tax Accounting TDS teacher teaching technology test testimonial testimonials thailand tips trading trading on equity transaction trend trial balance tuition twitter UAE UGC - NET Commerce UK United Arab Emirates university usa valuation VAT Video Voucher and vouching wikipedia working capital youtube
false
ltr
item
Accounting Education: What is Dividend?
What is Dividend?
http://svtuition.googlepages.com/dividend.PNG
Accounting Education
http://www.svtuition.org/2009/12/what-is-dividend.html
http://www.svtuition.org/
http://www.svtuition.org/
http://www.svtuition.org/2009/12/what-is-dividend.html
true
2410664366776677676
UTF-8
Not found any lecture VIEW ALL Readmore Reply Cancel reply Delete By Home PAGES Lectures View All RECOMMENDED FOR YOU Category ARCHIVE SEARCH ALL Lectures Not found any lecture match with your request, please help to write it and send it to our email at vinod@svtuition.org for making this website free accounting and finance encyclopedia. Back Home Sunday Monday Tuesday Wednesday Thursday Friday Saturday Sun Mon Tue Wed Thu Fri Sat January February March April May June July August September October November December Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec just now 1 minute ago $$1$$ minutes ago 1 hour ago $$1$$ hours ago Yesterday $$1$$ days ago $$1$$ weeks ago more than 5 weeks ago Followers Follow THIS CONTENT IS PREMIUM Please share to unlock