Dividends received as income in financial statements

Steps:

• Identify dividends received as income from investments, per accounting standards like IFRS 9 or IAS 18.
• Recognize dividend income in the period it is receivable, not when cash is received.
• Record it as revenue or other income on the income statement to reflect profit impact.
• Confirm no direct entry in balance sheet or equity statements unless related to equity investments.

Why A is correct:

• Under accrual accounting (IAS 1), dividend income is reported in the income statement as it contributes to net profit for the period.

Why the others are wrong:

• B: Statement of changes in equity shows equity transactions like owner dividends paid, not received income.
• C: Statement of changes in equity tracks equity movements, excluding income like dividends received.
• D: Statement of financial position shows assets/liabilities, not income; dividends received affect cash but are not shown there as income.

Final answer: A