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Cash flow statement

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shivangi

article

8 Points Joined April 2013

Cash flow statementThis query is : Open Report Abuse Follow Query Ask a Query shivangi (Querist) Follow 17 August 2017I have one doubt regarding Indirect method of preparing cashflow statementIn cashflow statement whenever in additional information it given as net profit for the year endedxx is ₹xx after providing depreciation we used to add back depreciation only while doing adjustments for non cash and non operating items for eg ques 7 of practice manual of Acc pg no: 2.33Now as per question no 10 of practice manual of Fm they have added profit by sale of fixed asset as well -ques no 10 pg no 3.67My doubt is if we are giving effect of non operating items such as profit / sale then why no treatment for other operating items for eg dividend payable given Is there printing error in solutions? ← Previous Next →You need to be the querist or approved CAclub expert to take part in this query . Unanswered Queries

Replies (1)

Anu K S

Cleared CA Final

195 Points Joined June 2015

profit or loss on sale of fixed assets is added back to net profit because it relates to the investing activity (sale of fixed asset).
Dividend paid to shareholders is not an operating activity. It is financing activity. Hence it will be shown under Cash flows from Financing Activities.
In your query you have asked about dividend payable. Dividend payable is directly appropriated from reserves and is not routed through p&l. The impact of the same is captured in CFS in the movement in working capital.