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    Question

    A company earns good profit before the close of the

    financial year and declares dividend. This dividend is called:
    A Preferred Dividend Correct Answer Incorrect Answer
    B Special Dividend Correct Answer Incorrect Answer
    C Proposed Dividend Correct Answer Incorrect Answer
    D Interim Dividend Correct Answer Incorrect Answer
    E Final Dividend Correct Answer Incorrect Answer

    Solution

    An interim dividend is a distribution to shareholders that has been both declared and paid before a company has determined its full-year earnings. Such dividends are frequently distributed to the shareholders of a company either on quarterly or semi-annual basis. The final dividend is calculated after all financial statements are recorded at the end of the financial year based on the company’s annual profits. It is usually declared at a company's Annual General Meeting (AGM) for any given year. Preferred dividend is a dividend that is accrued and paid on a company's preference shares. In the event that a company is unable to pay all dividends , claims to preferred dividends take precedence over claims to dividends that are paid on equity shareholders. Unlike interim or final dividend, aspecial dividend is a non-recurring distribution of company profits/assets, usually in the form of cash, to shareholders. A special dividend is larger compared to normal dividends paid out by the company. It is also referred to as an "extra dividend ". Proposed dividend is the amount of dividend suggested by board of directors to shareholders for approval in annual general meeting (AGM) based on the knowledge of all the future plans requiring cash, liquid assets available and the amount of profit that entity should distribute and retain.

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