The amount of dividend that can be paid to shareholders:
A)depends on how profitable a business is and on the current assets of the business.
B)is limited to the amount of current period profits.
C)is limited to the amount of current period profits and accumulated profits.
D)is limited to the amount of current period profits,accumulated profits and paid up capital.

Question

Quizplus · Accepted Answer

Dividends can only be paid out of current period profits and accumulated profits (retained earnings). Paid-up capital is the amount of capital contributed by the shareholders, and it is not available for payment of dividends. Therefore, option C is the correct answer.

The Amount of Dividend That Can Be Paid to Shareholders