ACCA FA · Chapter 9 · Question 7 of 10
A company has 1,200,000 ordinary shares of $0.25 each in issue. It pays a dividend of 5 cents per share. What is the total dividend payment?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) $60,000
Explanation
The dividend is stated per share, regardless of nominal value: 1,200,000 x $0.05 = $60,000. Applying 5% to the total nominal value (1,200,000 x $0.25 = $300,000) gives $15,000, which is the error of treating the dividend as a percentage of nominal value.
More Capital structure and finance costs MCQs
- Q9A company issued shares at $2.00 each several years ago. Its shares are now quoted on a stock exchange at $3.40 each. How does the…
- Q10For which of the following purposes may the share premium account be used?
- Q1A company issued 200,000 ordinary shares with a nominal value of $0.50 each at a price of $1.80 per share. What amount should be credited…
- Q2A company had 400,000 ordinary shares of $1 each and a share premium account of $150,000. It made a 1 for 4 bonus issue, using the share…
- Q3Which of the following statements about a bonus issue of shares is correct?