Question

5. What do you mean by Divident and Divisible Profit ?
Describe the duty of auditor in this regard.​

Answer 1

Explanation:

A dividend is a payment made by a corporation to its shareholders, usually as a distribution of profits. When a corporation earns a profit or surplus, the corporation is able to re-invest the profit in the business (called retained earnings) and pay a proportion of the profit as a dividend to shareholders.

Profit or a portion of profit that can be legally distributed as a dividend to the shareholders is known as Divisible Profit. All profit of the company is not divisible and number of factors should be considered while determining divisible profit of the company.