What does a corporation pay to shareholders to distribute profits?

Study for the KOSSA Academic and Employability Test. Explore multiple choice questions and hints for a well-rounded preparation. Ace your exam with confidence!

The correct answer is dividends. In a corporation, dividends represent a portion of the company's earnings that are distributed to shareholders as a way to share the profits generated from its operations. When a company performs well and generates profits, it may decide to return a portion of those profits to its investors in the form of dividends, which can be paid out in cash or additional shares.

While revenue refers to the total income generated by the company from its business activities, it is not a payment made to shareholders. Salaries are payments made to employees for their work, and bonuses are typically additional compensation given to employees based on performance or company profits, but neither of these options pertains to shareholder profit distribution. Therefore, dividends are the proper term for the practice of distributing profits to shareholders.

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