Scott SpA has a general dividend policy whereby it pays a constant annual dividend of €1 per share of.The firm has 1,000 shares outstanding.The company:
A)must always show a current liability of €1,000 for dividends payable.
B)is obligated to continue paying €1 per share per year.
C)will be declared in default and can face bankruptcy if it does not pay €1 per year to each shareholder on a timely basis.
D)has a liability which must be paid at a later date should the company miss paying an annual dividend payment.
E)must still declare each dividend before it becomes an actual company liability.

Question

Quizplus · Accepted Answer

A dividend must be declared by the company's board of directors before it becomes a liability.

Scott SpA Has a General Dividend Policy Whereby It Pays