Cash Flow Statement

Kindly clarify the following query:

How should we treat Unpaid/Unclaimed Dividend under Indirect Method of Cash Flow?

Eg:

Particulars                              As on 31.3.2001      As on 31.3.2002

Proposed Dividend                1,20,000                     1,44,000

Unpaid Dividend                        0                                   16,000

No additional Information

Here are my queries:

Isn't unpaid dividend part of Current Liabilities? So, will it affect cash flow from operating activities due to working capital changes?

If yes, how much will be the Dividend Paid under Cash Flow from financing activities.

Thanking you in advance

Replies (1)

yes the cash outflow to be shown in the financing activities is Rs. 104000. the unclaimed dividend is a current liability. but it does not arise from the operating activities like sundry creditors or bills payable. hence it should  not be treated in cash flow form operating activities.

it can be explained also like that proposed dividend is shown in the liability side. now when the dividend is paid that liability is gone. if the dividend remains unpaid or uncalimed that amount of cash flow does not occur and that ammount of liability(in this case Rs. 16000) exist in the balance sheet.

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