What is the purpose of calculating 'divisible profits' in a company's financial context?

To determine the amount of losses that need to be set off against current year's profits.

To ascertain the amount of profits that can be distributed as dividends to shareholders.

To calculate the total capital investments made by shareholders.

To assess the company's total revenue before tax deductions.

According to the Companies Act, 1956, what conditions must be fulfilled before a company can declare a dividend for a financial year?

The company must have zero accumulated losses.

The company must provide for depreciation for the current financial year.

The company must have no outstanding debts.

The company's profits should be higher than the previous year's profits.

Under what circumstances can a company distribute dividends out of capital profits?

If the company has no outstanding debts.

If such distribution is authorized by the Articles of Association.

If the company's current profits are significantly higher than the previous year's profits.

If the company has excess cash reserves.

What is the primary purpose of the Central Government's involvement in allowing a company to declare or pay dividend without providing for depreciation?

To boost the company's reputation among shareholders.

To encourage companies to invest in research and development.

To protect the interest of the public and ensure fair dividend distribution.

To promote healthy competition among companies.

What is the key factor that distinguishes 'interim dividend' from 'final dividend'?

Interim dividend is paid to shareholders before the annual general meeting, while final dividend is paid after the meeting.

Interim dividend is always higher than final dividend.

Interim dividend is paid out of capital profits, while final dividend is paid out of revenue profits.

Interim dividend is mandatory, while final dividend is optional.

Can a company declare dividends out of profits earned prior to its incorporation? Provide a legal perspective.

Yes, as these profits are part of the company's overall capital.

Yes, since these profits were earned by the business entity.

No, as the company did not exist during the period these profits were earned.

No, unless these profits are categorized as capital profits.

What legal requirements must be met before a company can pay dividends?

The company must have zero accumulated losses.

The company must have provided for all depreciation.

The company must ensure that the dividend is paid out of profits and not out of capital.

The company must have a surplus of assets over liabilities.

According to the Companies Act, 1956, how should a company handle losses incurred in previous financial years before declaring dividends?

The losses should be ignored if the company has adequate revenue reserves.

The losses should be set off against current year's profits before declaring dividends.

The losses should be shared equally among shareholders before declaring dividends.

The losses should be recovered from the company's debtors before declaring dividends.

What is the primary purpose of a 'Development Rebate Reserve'?

To distribute profits as dividends to shareholders.

To create a reserve for potential future losses.

To provide for depreciation on fixed assets.

To utilize a portion of profits for business development purposes.

How does the declaration of 'interim dividend' differ from 'final dividend' in terms of timing?

Interim dividend is declared after the annual general meeting, while final dividend is declared before the meeting.

Interim dividend is declared before the company's financial results are known, while final dividend is declared after assessing the company's full-year financial performance.

Interim dividend is declared only if the company is incurring losses, while final dividend is declared in profitable years.

Interim dividend and final dividend are declared simultaneously during the annual general meeting.

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