Which of the Following Statements About Dividends Is Not True

question 93

Multiple Choice

Which of the following statements about dividends is not true?

• A)Dividends represent a sharing of corporate profits with owners.
• B)Both stock dividends and cash dividends reduce retained earnings.
• C)Cash dividends paid to stockholders reduce net income.
• D)Dividends are declared at the discretion of the board of directors.

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Definitions:

Moral Hazard

The risk that one party to a transaction has incentives to take undue risks because the costs incurred will not be fully borne by that party.

Homeowner's Insurance

An insurance policy that provides financial protection against disasters, theft, and accidents that may occur in one's home or on their property.

Locking Possessions

The act of securing personal or valuable items to prevent unauthorized access or theft.

Liability

A legal obligation or responsibility that can arise from contracts, torts, or other legal matters, potentially resulting in the need to pay damages or perform specific acts.