Which of the following are the two financial requirements that the board of directors must consider when declaring a cash dividend?
i)the retained earnings account has a positive balance greater than the dividend.
Ii)the cash account has a balance greater than the amount of the dividend declared.
Iii)the company's earnings have shown growth for the last two quarters.
Iv)the shareholders have approved the declaration of the cash dividend.
A)i and iii
B)i and ii
C)ii and iv
D)ii and iii

Question

Which of the following are the two financial requirements that the board of directors must consider when declaring a cash dividend? 
i)the retained earnings account has a positive balance greater than the dividend.
Ii)the cash account has a balance greater than the amount of the dividend declared.
Iii)the company's earnings have shown growth for the last two quarters.
Iv)the shareholders have approved the declaration of the cash dividend.
A)i and iii
B)i and ii
C)ii and iv
D)ii and iii

Quizplus · Accepted Answer

The two financial requirements that the board of directors must consider when declaring a cash dividend are (i) the retained earnings account has a positive balance greater than the dividend and (ii) the cash account has a balance greater than the amount of the dividend declared. Option (iii) is incorrect as it does not relate to the financial requirements for declaring a dividend, and option (iv) is not always necessary as the shareholders may have already given approval in the past. Therefore, the correct choice is B.

Which of the Following Are the Two Financial Requirements That