Fundemental accounting

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altaf (Querist)
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25 November 2011 in company final account ,why interest paid to debentures is debit to p&l a/c? And why dividend paid to share holder is debit to p&l apporation a/c. ?

CMA. Subhash Kumar Jha

CMA. Subhash Kumar Jha (Expert)
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25 November 2011 Becoz : Interest paid to debentures is an expense of the company.

Whereas,

Dividend paid to shareholders is a distribution of profit to the shareholders.

I hope you got the point.

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altaf

altaf (Querist)
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25 November 2011 ok sir thanks you.