Which of the Following Can Be Reasons for a Company

question 46

Multiple Choice

Which of the following can be reasons for a company to declare a share dividend (bonus issue) ?
I. To reduce the market price of their shares.
II. To capitalise the retained earnings of the company.
III. To conserve cash.
IV. To increase the number of shareholders.

• A) I and II only.
• B) I, II, III and IV.
• C) I, III and IV only.
• D) I, II, and III only.

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Definitions:

Variable Expenses

Costs that change in proportion to the activity of a business, such as sales or production levels.

Fixed Expenses

Costs that do not change in total despite fluctuations in the volume of goods or services produced or sold.

Annual Sales

The total revenue generated from the sale of goods or services in one fiscal year.

Variable Expenses Per Unit

Costs that vary directly with the level of production or sales volume, such as raw materials and direct labor costs per unit.