Which statement best describes the profit-sharing feature of corporations?
A) Shareholders are paid a pre-determined rate of return.
B) Shareholders are automatically entitled to a dividend if the business is profitable.
C) The decision of whether to declare dividends is controlled by the shareholders.
D) Shareholders are only entitled to dividends if they are declared by the directors.

Question

Quizplus · Accepted Answer

Shareholders in a corporation are entitled to receive dividends only if the board of directors declares them. The decision to distribute profits as dividends rests with the directors, not automatically with the shareholders or based on a pre-determined rate.

Which Statement Best Describes the Profit-Sharing Feature of Corporations