Dividend Payments

Hi,

Could someone confirm that any Dividend payments made are posted direct to the balance sheet (not on the Profit & Loss?)

And what sub catergory should the dividend payments go under on the balance sheet?

Many thanks in advance for any feedback,

Wes

Answers

  • CeeJaySix
    CeeJaySix Registered Posts: 645
    Correct - although when you say 'posted', be aware that some accountancy packages have dividends in the P&L codes in the standard chart of accounts (eg. Sage) so they show retained profit on the P&L report rather than proper accounting profit for the year.

    As far as statutory accounts are concerned, dividends do not appear anywhere in their own right in the primary statements - they are a deduction from retained profits within reserves on the balance sheet. They must be disclosed in the notes to the accounts and will also be included in the reserves note (which reconciles opening to closing reserves - in it's simplest form this will just be the P&L reserve, and show opening balance plus profit for the year less dividends = closing balance).
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