Accounting 9706 · AS & A Level · Preparation of financial statements

Preparation of financial statements — practice question

A company holds a bank balance of $20000$. Its equity and reserves comprise: ordinary shares of $0.50$ each $10000$, capital reserves $5000$, revenue reserves $3000$. The directors want to pay the largest dividend that can be paid. How much of the bank balance will be used to fund the dividend?

  • A$3000
  • B$5000
  • C$8000
  • D$20000

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