alleryStart learning →For a company, is paying a dividend treated as an expense?
AYes, as an operating cost
BYes, as a finance cost
CNo, it is a profit division
DYes, as a tax cost
Answer & Solution
Correct answer: C. No, it is a profit division
A dividend is a split of after-tax profit among owners and is not charged as an expense.
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Related questions
Which limits can restrict how much a firm may distribute as dividend?Why might management avoid changing dividend policy abruptly?Which alternative to cash dividends may a firm choose when surplus cash exists?Which type of shareholder usually prefers earnings to be retained?With no NPV-positive projects and surplus cash, what should management do?Management knowing more than the market is called what?If dividends bear higher tax than gains, raising them does what to value?Per the Modigliani-Miller theorem, dividend policy has what effect on firm value?