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'Certain provisions… (Class 12 Business Studies 2026, Q18)

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Business StudiesCBSE Class 12 · Board exam 2026, set 66/1/1 · 1 mark · MCQ

CBSE Class 12 Business Studies 2026: question 18

Set in the CBSE Class 12 board exam of 2026, paper 66/1/1, section A, question 18, for 1 mark. Try it first; the hints and our step-by-step solution are below.

Q18 · 1 mark · MCQCompetency-basedFinancial Management

'Certain provisions of the Companies Act place restrictions on payouts as dividend. Such provisions must be adhered to while declaring the dividend.'

The factor affecting dividend decision discussed above is :

  1. (A)Access to capital market
  2. (B)Contractual constraints
  3. (C)Legal constraints
  4. (D)Stock market reaction

Source: official question paper from cbse.gov.in (PDF). See it in the full 2026 board paper, set 66/1/1.

Hints

Open one hint at a time and try again before the next.

Hint 1

Does the restriction come from the law or a lender?

Hint 2

Contractual constraints come from loan agreements.

Step-by-step solution

Each step shows the marks it earns, as an examiner would award them. Checked by an independent re-solve from the question paper.

  1. Restrictions imposed by the Companies Act are restrictions of law.

  2. They are legal constraints on dividend; contractual constraints arise from loan agreements. Option (C).

    1 mark

Answer: (C) Legal constraints

Where the marks are

  • Companies Act provisions = legal constraints (1 mark)

Revise the chapter

Practise this chapterBoard-style questions from Financial Management, one at a time, marked against the answer key and marking points.Back to the full paper2026 board paper, set 66/1/1: every question, by section.

The question is transcribed from the official paper; figures are described in words. The solution, hints and chapter tag are ours. Spotted an error? Write tosupport@questionbuddy.in.