'Dividend' can be paid out of: MCQ with Answer and Explanation

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'Dividend' can be paid out of:

A. Borrowed funds

B. Capital

C. Securities premium

D. Current year's profits or accumulated profits

Answer: Option D

Solution (By JKSSB Mock Tests)

Dividend is paid only out of profits.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

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Question #1

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Under the Single Entry system, if additional capital introduced is Rs 20,000, Closing Capital is Rs 80,000, Opening Capital is Rs 50,000, and Drawings are Rs 15,000, what is the profit/loss?

A. Profit Rs 65,000

B. Profit Rs 15,000

C. Loss Rs 5,000

D. Profit Rs 25,000

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Correct Answer: Option D

Explanation:
Profit = Closing Cap (80k) + Drawings (15k) - Opening Cap (50k) - Additional Cap (20k) = 95k - 70k = Rs 25,000 Profit.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

Question #2

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The 'Comptroller and Auditor General' (CAG) is not responsible for audit of:

A. Autonomous bodies substantially financed by government

B. Government departments

C. Government companies

D. Public sector banks (statutory audit by CA firms)

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Correct Answer: Option D

Explanation:
Statutory audit of public sector banks is conducted by chartered accountant firms appointed by RBI/Central Government; CAG conducts supplementary audit.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping