Which of the following entities is responsible for declaring a dividend?

• A. Board of Directors
• B. Shareholders
• C. External Auditors
• D. Chief Financial Officer

Answer: (A)

Verified step by step guidance

1. Understand the concept of dividends: Dividends are payments made by a corporation to its shareholders, typically derived from profits. Declaring a dividend involves deciding the amount and timing of the payment.
2. Identify the role of the Board of Directors: The Board of Directors is responsible for overseeing the management of the company and making key decisions, including the declaration of dividends.
3. Clarify the role of shareholders: Shareholders are the owners of the company, but they do not have the authority to declare dividends. They receive dividends once declared by the Board of Directors.
4. Explain the role of external auditors: External auditors are responsible for reviewing the company's financial statements to ensure accuracy and compliance, but they do not have the authority to declare dividends.
5. Discuss the role of the Chief Financial Officer (CFO): The CFO manages the financial operations of the company and may provide recommendations regarding dividends, but the authority to declare dividends lies with the Board of Directors.