ICAEW AF · Chapter 13 · Question 2 of 12
Where are ordinary dividends paid during the year shown in a company's financial statements prepared under IFRS?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) In the statement of changes in equity, as a deduction from retained earnings
Explanation
Dividends are distributions to owners of their share of profits, not expenses of the business. They are therefore presented in the statement of changes in equity as a reduction of retained earnings. Finance costs relate to interest on borrowings, not to returns to shareholders.
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