Which of the following is a requirement that must be fulfilled in order to declare and pay a cash dividend?
A)Sufficient cash.
B)Sufficient prepaid expenses.
C)No dividends in arrears.
D)Relatively low trade payables.

Question

Quizplus · Accepted Answer

The company must have sufficient cash to declare and pay a cash dividend. Dividends cannot be paid out of prepaid expenses, trade payables or any other non-cash accounts. Furthermore, there should be no dividends in arrears i.e. the company must fulfill its obligation to pay any previously declared dividends before announcing a new one.

Which of the Following Is a Requirement That Must Be