Which Statement About Cash Dividends Is Correct

question 5

Multiple Choice

Which statement about cash dividends is correct?

• A)The date of declaration is the date that determines which shareholders will receive the dividends.
• B)The date of declaration is the date on which the Board of Directors declares a dividend and the company has an obligation to pay the dividend.
• C)The date of record is the date when the funds for the dividend are transferred to shareholders.
• D)The company must record a journal entry on the date of declaration, the date of record and the date of payment.

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Definitions:

Long-Term Investments

Investments in securities or other assets intended to be held for a period exceeding one year for capital growth or income generation.

Trading Investment

An investment in securities with the intention of selling them in the short term to profit from price changes.

Interest

The cost of borrowing money, usually expressed as a percentage of the amount borrowed, paid by the borrower to the lender.

Market Rate

The current price or interest rate at which a good, service, or security can be bought or sold in a competitive marketplace.