Explore Exams
Login Signup
Sign in Open App
B Com Exam  >  B Com Test  >  Company Law  >  Test: Dividends & Audit- 1 - B Com MCQ

Dividends & Audit- 1 - Free MCQ Practice Test with solutions, B Com Company


MCQ Practice Test & Solutions: Test: Dividends & Audit- 1 (10 Questions)

You can prepare effectively for B Com Company Law with this dedicated MCQ Practice Test (available with solutions) on the important topic of "Test: Dividends & Audit- 1". These 10 questions have been designed by the experts with the latest curriculum of B Com 2026, to help you master the concept.

Test Highlights:

  • - Format: Multiple Choice Questions (MCQ)
  • - Duration: 10 minutes
  • - Number of Questions: 10

Sign up on EduRev for free to attempt this test and track your preparation progress.

Test: Dividends & Audit- 1 - Question 1
Save

According to Palmer's Company Law, what are "divisible profits"?

Detailed Solution: Question 1

"Divisible profits" refer to the profits that the law allows the company to distribute among shareholders by way of dividends. These are the profits that can be divided and distributed to shareholders after deducting necessary expenses.

Test: Dividends & Audit- 1 - Question 2
Save

What is the primary objective of distributing dividends in a company?

Detailed Solution: Question 2

The primary objective of distributing dividends in a company is to maximize shareholders' wealth. Dividends are the profits that are distributed among shareholders in proportion to their shareholdings. This allows shareholders to realize the financial benefits of their investment in the company, thereby increasing their wealth.

Clear all your doubts with EduRev
Test: Dividends & Audit- 1 - Question 3
Save

Which type of dividend is paid between two annual general meetings without being declared at the annual general meeting?

Detailed Solution: Question 3

An interim dividend is a dividend paid by the company's board of directors between two annual general meetings without declaring it at the annual general meeting. It is usually based on the company's performance during a specific period within the financial year.

Test: Dividends & Audit- 1 - Question 4
Save

What must a company do before declaring any dividend in a financial year?

Detailed Solution: Question 4

Before declaring any dividend in a financial year, a company may transfer a percentage of its profits for that year to the reserves. This step ensures that a portion of the profits is retained within the company for future needs and growth.

Test: Dividends & Audit- 1 - Question 5
Save

What conditions must be fulfilled before a company can declare a dividend out of accumulated profits?

Detailed Solution: Question 5

Before declaring a dividend out of accumulated profits, the company's dividend rate cannot exceed the average rates of the dividends declared in the three immediately preceding financial years, unless no dividends were declared in those years.

Test: Dividends & Audit- 1 - Question 6
Save

In case a company has incurred losses up to the end of the preceding quarter, what limitation applies to declaring interim dividends?

Detailed Solution: Question 6

If a company has incurred losses during the current financial year up to the end of the quarter immediately preceding the date of declaration of interim dividend, such interim dividend cannot be declared at a rate higher than the average dividends declared by the company during the immediately preceding three financial years.

Test: Dividends & Audit- 1 - Question 7
Save

What is the purpose of the Investor Education and Protection Fund (IEPF)?

Detailed Solution: Question 7

The Investor Education and Protection Fund (IEPF) is established to support activities related to investor education, awareness, and protection. The fund aims to provide resources for educating and safeguarding the interests of investors in the corporate sector.

Test: Dividends & Audit- 1 - Question 8
Save

What is the consequence if a company fails to pay dividends within thirty days of their declaration?

Detailed Solution: Question 8

If a company fails to pay dividends or post the dividend warrant within thirty days from the date of declaration, the directors of the company who are knowingly involved in the default may be punishable with imprisonment, which may extend to two years.

Test: Dividends & Audit- 1 - Question 9
Save

Under what circumstances can a declared dividend be revoked?

Detailed Solution: Question 9

Ordinarily, a declared dividend cannot be revoked. However, with the consent of the shareholders, a declared dividend can be revoked. This is because the declaration of dividend creates a debt to the shareholders, and any change requires their agreement.

Test: Dividends & Audit- 1 - Question 10
Save

What type of dividends can be declared to distribute the interest or other income from investments made from the Investor Education and Protection Fund?

Detailed Solution: Question 10

The interest or other income received from investments made from the Investor Education and Protection Fund (IEPF) can be distributed as interim dividends. This helps in utilizing the funds generated by the IEPF to benefit shareholders through interim dividends.

122 docs|32 tests
Join Course
Information about Test: Dividends & Audit- 1 Page
In this test you can find the Exam questions for Test: Dividends & Audit- 1 solved & explained in the simplest way possible. Besides giving Questions and answers for Test: Dividends & Audit- 1, EduRev gives you an ample number of Online tests for practice
122 docs|32 tests
Join Course
Download as PDF

About this B Com Practice Test

This test contains 10 MCQs on Dividends & Audit- 1 with detailed solutions for each question. It is part of the Company Law course on EduRev, designed to align with the current B Com syllabus. Each solution explains not just the correct answer but also gives you an understanding of the topic — not just to attempt the question but also help you prepare for the exam with practice.

Explore more B Com Study Resources

If you found this Dividends & Audit- 1 MCQ Test helpful, you can further enhance your B Com preparation with in-depth courses on EduRev, for all the subjects and topics available in Company Law course. The course offers:
  • Video Lectures: covering all the topics of Company Law
  • Notes for Revision: offering revision notes, important questions, summaries, flashcards, cheatsheets & more for B Com preparation
  • MCQ Test: variety of questions as per the pattern of B Com exam
Signup to see your scores go up within 7 days!
Access 1000+ FREE Docs, Videos and Tests
Takes less than 10 seconds to signup