proposed dividend

First you have to examine what proposed dividend actually is.
Is proposed dividend relates to current year or previous year?
While you calculate “Net Profit before tax and extra ordinary items” in the working notes ADD Current year’s proposed dividend to the Net Profit. So that effect will nullify from cash flow from operating activity.
When you come to Cash flow from Financing Activities , SUBTRACT Previous year’s Proposed Dividend because it will be paid in the current financial year. So its cashout flow from financial activity.

for the proposed dividend, there is no out flow of cash. is it simply profit separated from total reserves. so while calculating earning after taxation (when profit and loss account or net profit is not available) proposed dividend is to be added to current year profit after all appropriations.

But last year proposed dividend must have to pay and shall be made in current year so it's cashout flow from financial activity.

sir, basically there is a revision in AS -5. regarding proposal of dividend. please refer amendment notification.

if it is approved by directors, then it is will be considered as liability in the hands of directors.

Sorry sir, i suggested as per one of the cashflow sum of ipcc. Thanks to guide me. But it's relates to AS-4 i think so.

better to refer latest material. all problems were revised.

But Sir AS4 tells to add previous year proposed dividend and subtract current year's proposed dividend. We should follow as3 or As4. Please provide latest and appropriate update in this regard. Because this factor has led many students into confusion and they could even make a 6 marker mistake in their cbse class 12 accounts annual boards paper. And if it's as4 please update your answer for others appropriateness towards your concerned concept shared in the group of caclub India. Looking for a positive reply. This reply has been given to the answer of treatment of proposed dividend

as per AS 4- no entry is required in the books of accounts for proposal of dividend. so when no entry in books- no question of cash flow as per AS-3.

If dividend is declared by share holders at AGM, then it's a liability in the hands of company - Dividend payable a/c will arise in the books. if the dividend payable is at the reporting date, balance sheet contains opening and closing dividend payable a/c.

then you can proceed as per As-3, to assess cash movement.