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O Level Accounting (7707)•7707/11/M/J/23
Question 26 from 7707/11/M/J/23

Explanation

Final Dividend Percentage Calculation Steps:

  • Profit available for dividends: 13,000totalprofit−13,000 total profit - 13,000totalprofit−6,000 reserve = $7,000.
  • Remaining after interim dividend: 7,000−7,000 - 7,000−3,000 = $4,000 for final dividend.
  • Percentage on share capital: (4,000/4,000 / 4,000/50,000) × 100% = 8%. Why A is correct:
  • Dividend percentage is final amount divided by nominal share capital ($1 par value), per standard accounting for ordinary shares. Why the others are wrong:
  • B: Total dividends (interim + final = $7,000) as percentage of capital.
  • C: No basis; exceeds available profit after reserve.
  • D: Total profit before reserve as percentage of capital.

Final answer: A

Topic: Limited companies

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