How Is It Possible?

Depreciation is a non-cash expenditure 

hence, the profit is reduced not the cash....

par yaha par cash deprication ke karan kaha reduce hui

yaha to divident ke karan reduce ho rahi he

depreciation is non-cash expenditure, so charging of depreciation does not results into cash reduction.

and in ur question, cash is reduced due to paying dividend not charging the depreciation.

Ya anshu is rite....

the cash decrease is on declaration of dividend and not when depreciation is provided.....

Dear,

Dep. allows as a non cash item. for this reasone cash will not reduce due to dep., but cash will be reduce when u will paid divident..

Dear,

Dep. allows as a non cash item. for this reasone cash will not reduce due to dep., but cash will be reduce when u will paid divident..

Hi

Dep is a non-cash item. If u want to pay dividend then u have to see the availability of profit and not the availability of cash.

when u pay dividend ur profit will get reduced and also the cash.

For eg. let dep. is Rs. 10,000 and profit for current year before dep. is Rs. 1,10,000. Then after dep. ur profit will be Rs. 1,00,000 and cash will be Rs. 1,10,000 (profit for curr, year + dep). let dividend proposed is Rs. 50,000 then u have to look at the availability of profit and not cash. Here the profit is available, therefore u can pay the dividend, then after dividend ur profit will be Rs. 50,000 and cash will be Rs. 60,000. Thus by paying dividend ur cash is not reducing bcoz of dep. and the given first line is correct.