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Trading Accounts!!!

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Sasso1 | 14:16 Thu 25th Aug 2011 | Business & Finance
2 Answers
If a dividend (as opposed to salary)is paid to a Director would this be classed as
a) P & L account
b) Balance Sheet item
c) Off-set against Director`s Loan account

Any suggestion please?

Many thanks

Sasso1
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It goes to the balance sheet, straight into the Retained earnings. It should not form part of the profit and loss for the year.
14:33 Thu 25th Aug 2011
It goes to the balance sheet, straight into the Retained earnings. It should not form part of the profit and loss for the year.
None of the above.

Traditionally it would have been a P&L account item "below the line" which means it wouldn't have appeared in a "Trading Account" but at the bottom of the Statutory P&L Accounts after "Net Profits for Year" as a distribution before the "Retained for year" figure was added to Retained Profits brought forward.

However, the new standard format removes it from all statements in effect. It comes off the Retained Earnings figure in a note to the accounts and the lower P&L Account balance appears in the Balance Sheet as a result.

I hope that's clear, but to be absolutely so, the actual dividend figure itself does not appear in either the trading account or the published P&L Account or Balance Sheet.

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