Premium on share
Profit on issue of forfeited share
General reserve
All of the above
Answer is Right!
Answer is Wrong!
The correct answer is D. All of the above.
A company can use the following sources to pay dividend on shares:
- Premium on share: This is the amount paid by the shareholder in excess of the face value of the share.
- Profit on issue of forfeited share: This is the profit that a company makes when a shareholder fails to pay the call money on a share and the share is forfeited.
- General reserve: This is a reserve that a company creates out of its profits. It is not used for any specific purpose and can be used for any purpose, including paying dividend.
The company can use any or all of these sources to pay dividend on shares. The decision of which source to use will depend on the company’s financial position and the dividend policy of the company.