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Dividends are...

Question

Dividends are paid out of ____________.

A

Accumulated Profit

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B

Gross Profit

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C

Profit after Tax

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D

General Reserve

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Solution

The correct option is C Profit after Tax
A dividend is a payment made by corporation to its shareholders, usually as a distribution of profits. When a corporation earns profit or surplus, the corporation is able to re-invest its profits in the business (called retained earnings) and pay a proportion of the profit as a dividend to shareholders.

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