An item that would be considered a first charge against profit in a company's account is
Question 1 Report
An item that would be considered a first charge against profit in a company's account is
Answer Details
A first charge against profit in a company's account is an item that is paid out of the profits before any dividends are paid to the shareholders. The only option that meets this definition is "preference dividend". Preference dividends are paid to preference shareholders before ordinary shareholders, and they must be paid before the company can pay any dividends to its ordinary shareholders. Therefore, preference dividends are considered a first charge against profit in a company's account. The other options, such as capital reserve and general reserve, are not necessarily paid out of profits and may be optional depending on the company's financial situation.
Download The App On Google Playstore
Everything you need to excel in your exams
Personalized AI Learning Chat Assistant
200,000+ Exam Questions Across IGCSE, JAMB, WAEC & NECO
Over 3,900 Lesson Notes
Offline Support - Learn Anytime, Anywhere
Green Bridge Timetable
Literature Summaries & Potential Questions
Track Your Performance & Progress
In-depth Explanations for Comprehensive Learning