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What are the important provisions regarding divisible profits ?
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What are the important provisions regarding divisible profits ?
Concept of Divisible Profit. The profits available for the distribution among the shareholders of a company as dividend are called divisible profits. The profits are calculated by comparing the income and expense of one year. The necessary adjustments are made before calculating the profit of a business concern.
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What are the important provisions regarding divisible profits ?
The profit which is divided among the shareholders of company is divisible profit
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What are the important provisions regarding divisible profits ?
Provisions regarding Divisible Profits
- Definition: Divisible profits refer to the portion of profits that can be distributed among the shareholders of a company after setting aside reserves and providing for depreciation and taxes.
- Legal Provisions:
- Companies Act, 2013: The Act provides guidelines on the distribution of divisible profits among shareholders.
- Articles of Association: The company's AoA may also contain specific provisions regarding the distribution of profits.
- Calculation of Divisible Profits:
- Net Profit: Divisible profits are calculated based on the net profit of the company after deducting expenses, depreciation, and taxes.
- Reserves: Reserves are set aside before determining the amount of divisible profits.
- Utilization of Divisible Profits:
- Dividend: Divisible profits are primarily used for the payment of dividends to the shareholders.
- Reinvestment: Companies may also choose to reinvest a portion of divisible profits back into the business for growth and expansion.
- Disclosure: Companies are required to disclose the amount of divisible profits and the proposed distribution of dividends in their financial statements for transparency and accountability.
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What are the important provisions regarding divisible profits ?
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What are the important provisions regarding divisible profits ? for B Com 2024 is part of B Com preparation. The Question and answers have been prepared according to the B Com exam syllabus. Information about What are the important provisions regarding divisible profits ? covers all topics & solutions for B Com 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for What are the important provisions regarding divisible profits ?.
What are the important provisions regarding divisible profits ? for B Com 2024 is part of B Com preparation. The Question and answers have been prepared according to the B Com exam syllabus. Information about What are the important provisions regarding divisible profits ? covers all topics & solutions for B Com 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for What are the important provisions regarding divisible profits ?.
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