[amp_mcq option1=”an expense of the company” option2=”an income of the company” option3=”the distribution of profit earned by the company” option4=”the source of fund for the company” correct=”option3″]
The correct answer is C.
A dividend is a distribution of a portion of a company’s earnings, decided by its board of directors, to a class of its shareholders. It is a distribution of profit earned by the company.
A is incorrect because a dividend is not an expense of the company. An expense is a cost incurred by a company in the course of generating revenue. Dividends are not costs, they are distributions of profit.
B is incorrect because a dividend is not an income of the company. Income is revenue generated by a company. Dividends are not revenue, they are distributions of profit.
D is incorrect because a dividend is not a source of fund for the company. A source of fund is a way for a company to raise money. Dividends are not a way for a company to raise money, they are a way for a company to distribute profit.