Dividend Income is defined as distribution of earnings/profits to shareholders in the form of cash, stock, or property. Mutual fund dividends are paid out of income, usually on a quarterly basis, from interest generated by a fund’s investments. It is also known as a dividend distribution.

1.           DIVIDEND WARRANT: The auditor can vouch the cashbook for
dividend income. The dividend warrant is received from the company. It is paid into bank for collection. The cash book entry is compared with the amount of dividend warrant.
2.           DIVIDEND DECLARED: The shareholders declare the dividend at the end of the year. The copy of resolution can be checked to note the rate
3.         DIVIDEND RECEIVED: The dividend is collected through banks. The
entry in bank statement can be compared with the rate of dividend and the amount of dividend. The auditor can ask the banker to provide
4.       TAX DEDUCTED AT SOURCE: The tax may be deducted at source
must be checked. The company can deduct tax on dividend. The amount is paid to the shareholders. The tax is paid to the government.
The certificate of such tax must be collected.
5.       CASH BOOK: The auditor can vouch cash book entry for dividend
collected. The nature of investment, dividend declared and paid, and the date of receipt must be checked from the cashbook. The investment
register may be seen for vouching.

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