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CA Intermediate · Advanced Accounting · Financial Statements of Companies

Dhruv Engineering Ltd. has opening balance in Statement of Profit and Loss (credit) of ₹3,00,000. Profit for the year is ₹9,00,000. It transfers ₹2,00,000 to general reserve, proposes a final equity dividend of ₹1,50,000 (declared after the balance sheet date, before approval of accounts) and pays an interim dividend of ₹1,00,000 during the year. Under current Indian GAAP at Foundation level (AS 4 as amended), what is the closing balance of surplus in the Statement of Profit and Loss?

Not reliable.

  1. A₹7,00,000Correct
  2. B₹5,50,000
  3. C₹8,50,000
  4. D₹6,50,000

Explanation

Proposed dividend declared after balance sheet date is not a liability and is not adjusted; it is only disclosed. Closing = 3,00,000 + 9,00,000 - 2,00,000 - 1,00,000 (interim paid) = 9,00,000? Recompute: 12,00,000 - 3,00,000 = 9,00,000. Hence the correct figure is ₹9,00,000, which is not among the options as listed; the nearest intended option is not valid.

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