If a company has a share capital of $100,000,revenue reserves of $15,000 and retained profits of $30,000,what is the maximum amount it can legally distribute as cash dividends?

Question

Quizplus · Accepted Answer

The maximum amount a company can legally distribute as cash dividends is calculated by adding the retained profits and revenue reserves, which would be $45,000 ($15,000 + $30,000). The share capital does not factor into this calculation as it is the amount the company originally raised through the issuance of shares and not available for distribution as dividends. Therefore, the correct answer is B.

If a Company Has a Share Capital of $100,000,revenue Reserves