There are two statements marked as Assertion (A) and Reason (R). Mark your answer as per the options given below.
Assertion (A): Dividend Payable or Unpaid Dividend is a Short-term Provision and is shown under the main head Current liabilities.
Reason (R): Dividend Payables or Unpaid Dividend is not a provision but a liability and is shown under the head Other Non-current Liabilities.
Answer & explanation
Correct answer: option 4
The correct answer is option 4- Assertion (A) is not correct and the Reason (R) is also not correct.
Assertion (A): Dividend Payable or Unpaid Dividend is a Short-term Provision and is shown under the main head Current liabilities. THIS IS FALSE. Unpaid Dividend is not a Short-term Provision but it is a liability.
Reason (R): Dividend Payables or Unpaid Dividend is not a provision but a liability and is shown under the head Other Non-current Liabilities. THIS IS FALSE. Unpaid Dividend is not shown under the head Other Non-current Liabilities, it is shown under current liabilities.
Dividend payable is a short-term liability of the company and Short term liabilities are those liabilities that have to be paid within one year. It is shown under the head ‘Current Liabilities’ in the Balance sheet of a company.