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"Shareholders will always prefer a cash dividend to a share dividend while the company prefers the...

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Accounting

"Shareholders will always prefer a cash dividend to ashare dividend while the company prefers the reverse". Why mightthis be the case?

(Think about the journal entry for both.)

Answer & Explanation Solved by verified expert
4.3 Ratings (909 Votes)
Let us evaluate the reasons for the same A dividend is a distribution of the companies earnings and its main purpose is to return wealth back to the shareholders Cash Dividend Shareholder receive regular cash income as there is a cash inflow Shareholders might need to pay tax Cash dividend entries Eg XYZ corporation 10000 shares outstanding has cash dividend of 03 31stMarch Retained earnings 10000 03 Dr 3000 to dividend    See Answer
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