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Vismay ShahVismay Shah asked 4 months ago

What is the meaning of Adequate or inadequate profit for distributing dividends? If there is adequate profit, then there is no limit to giving dividends, unlike Inadequate profit? And if the company is giving dividend out of C.Y. profit then it should be calculated as per section 198 or as per the statement of profit & loss? What if there is Accumulated losses, still the company can give dividend?

2 Answers
RaviRavi Staff answered 4 months ago

Adequate Profits means, profits are enough to pay amount of dividend we want to pay. Profits in P&L Account = 25,00,000, Dividend we want to pay 20,00,000 that means profits are adequate. If we want to pay dividend of 30,00,000 then we will have to use general reserves also.
Profit should be as appearing in P&L Appropriation A/C
 

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