Question

Assertion (A): Proposed Dividend for current year is shown under ‘Other Current Liabilities’.

Reason (R): Unclaimed Dividend is shown under ‘Other Current Liabilities’.

In the context of the above two statements, which of the following is correct?

विकल्प

• Both (A) and (R) are true, but (R) is not the correct explanation of (A).

• Both (A) and (R) are true and (R) is the correct explanation of (A).

• Both (A) and (R) are false.

• (A) is false, but (R) is true.

Answer 1

(A) is false, but (R) is true.

Explanation: 

Proposed Dividend for the current year is not shown under ‘Other Current Liabilities’; instead, it is disclosed in the Notes to Accounts as a contingent liability since it is yet to be approved by shareholders. Therefore, the assertion (A) is false. However, Unclaimed Dividend is correctly classified under ‘Other Current Liabilities’ because it is a liability to be paid to shareholders who have not yet claimed their dividend. Hence, (R) is true and (A) is false.