Dividends can be paid only out of ___________.

Share premium A/c

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Current year's profits

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Reserve fund

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Capital redemption reserve A/c

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Solution

The correct option is C Current year's profits
Dividends can be paid only out of the current year's profit or free reserves available with the company relating to the current year. Dividends to the shareholders are declared out of the current year profits only.

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Similar questions

Q. Consider the following statements:
1. The bonus shares shall not be issued in lieu of dividend,
2. A company may issue fully paid up bonus shares to its members out of its 'Capital Redemption Reserve Account'
3. A company may not issue bonus shares out of its 'Securities Premium Account'
Which of the above statement/s is are not correct?

Where a company creates a Debenture Redemption Reserve for the redemption of such debentures, the amount shall be credited, out of its ___every year until such debentures are redeemed.

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Dividends can be paid only out of ___________.

The correct option is C Current year's profitsDividends can be paid only out of the current year's profit or free reserves available with the company relating to the current year. Dividends to the shareholders are declared out of the current year profits only.

The correct option is C Current year's profits
Dividends can be paid only out of the current year's profit or free reserves available with the company relating to the current year. Dividends to the shareholders are declared out of the current year profits only.