Dividend declared by a company ________.

A. may be paid in kind

B. must be paid in cash

C. may be paid in cash or in kind

D. may be paid in cash only

Answer: Option D

Solution(By Examveda Team)

Dividend declared by a company may be paid in cash only. On the date of payment, the company reverses the dividend payable with a debit entry and credits its cash account for the respective cash outflow. Cash dividends do not affect a company's income statement. However, they shrink a company's shareholders' equity and cash balance by the same amount.