Question

What are the provisions for disposal of companies profit ?

Answer 1

Disposal of company profits

Disposal of Profits

Disposal of Profits.

The main objectives of a firm are to maximise the shareholders' wealth. ...

It simply means that a company can dispose their profits in two different ways: Disposal in the forms of dividend; and transferring the profits to reserve funds/retained earnings.

Answer 2

Provisions for disposal of companies profit

Explanation:

A company can dispose it's profit in two ways- Reserve fund and declaration of dividend. But before that it must meet all it's expenses and liabilities like depreciation, provision for bad and doubtful debt etc.

1. Reserve fund-   It is that part of company's profit which is kept in liquid form so that unexpected cost and expenses can be met. sometimes the reserve fund is also used to meet regular expenses.
2. Dividend-  Dividend is the part of profit which is paid at regular interval to the shareholder's of the company. it is distributed from the net profit which is attained after making all the payments etc.

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Difference between equity and preference share

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