Accouting
Profit
Definition
There is no legal definition of profits in Corporations Act. The courts consider profit as a matter of internal management of a company, so only provide guidelines to define the profits. In Re Spanish Prospecting Co Ltd [1911] 1 Ch 92, Fletcher Moulton LJ stated profit is amount of gain which made by the business during the financial year. In addition, in Marra Developments Ltd v B W Rofe Pty Ltd [1977] 2 NSWLR 616, Mahoney JA consider profits are available for distribute the dividends after they have been disclosed by financial statements. According to accounting practice, pay dividends out of profits shall debit the liability account to meet the balance of accounts. Calculate the profits
Calculating profits in the financial year is important for the company. According to AASB, profits are disclosed by comprehensive income statement. In accounting practice, profit is resulted by using income minus expense. In QBE Insurance Group Ltd v ASC (1992) 38 FCR 270, the held are influenced by the accounting standards to define profits. In addition, depend on the Corporate Act 2001, profit means the comparison between assets at two specific dates. So profits are the increased value of fixed and current assets.
Difference between dividends and profits
Dividends are the return which the company gives to the investors. The director has power to pay a dividend without declaration by shareholders and the shareholders cannot force director to pay dividends even though the company has ability to pay it. Even dividends have close relationship with profits, but they still have light differences. Dividends are involved in profits, so if no profits in the current period, there is no dividends payment. Generally, dividends always be decided following by the financial statement disclose.
Dividend
Definition and power to pay dividends
Stirling LJ in Re Crichton’s Oil Co [1902] 2 Ch 86 at 95 consider dividends means “ prima facie a
Definition
There is no legal definition of profits in Corporations Act. The courts consider profit as a matter of internal management of a company, so only provide guidelines to define the profits. In Re Spanish Prospecting Co Ltd [1911] 1 Ch 92, Fletcher Moulton LJ stated profit is amount of gain which made by the business during the financial year. In addition, in Marra Developments Ltd v B W Rofe Pty Ltd [1977] 2 NSWLR 616, Mahoney JA consider profits are available for distribute the dividends after they have been disclosed by financial statements. According to accounting practice, pay dividends out of profits shall debit the liability account to meet the balance of accounts. Calculate the profits
Calculating profits in the financial year is important for the company. According to AASB, profits are disclosed by comprehensive income statement. In accounting practice, profit is resulted by using income minus expense. In QBE Insurance Group Ltd v ASC (1992) 38 FCR 270, the held are influenced by the accounting standards to define profits. In addition, depend on the Corporate Act 2001, profit means the comparison between assets at two specific dates. So profits are the increased value of fixed and current assets.
Difference between dividends and profits
Dividends are the return which the company gives to the investors. The director has power to pay a dividend without declaration by shareholders and the shareholders cannot force director to pay dividends even though the company has ability to pay it. Even dividends have close relationship with profits, but they still have light differences. Dividends are involved in profits, so if no profits in the current period, there is no dividends payment. Generally, dividends always be decided following by the financial statement disclose.
Dividend
Definition and power to pay dividends
Stirling LJ in Re Crichton’s Oil Co [1902] 2 Ch 86 at 95 consider dividends means “ prima facie a