CAF-2 · Chapter 4 · Question 10 of 15
Omega (Pvt.) Limited extended a loan of Rs. 2.5 million to one of its shareholders on 30 June 2026. The company's accumulated profits on that date were Rs. 1.8 million. What amount will be treated as a "dividend" for the shareholder?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) B) Rs. 1.8 million
Explanation
Any advance or loan made to a shareholder by a private company is treated as a dividend to the extent to which the company possesses accumulated profits. Thus, Rs. 1.8 million will be treated as a dividend.
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