Which of the Following Statements Is Not True About When

question 48

Multiple Choice

Which of the following statements is not true about when cash dividends can be paid?

• A)The retained earnings account must have an accumulated balance sufficient to cover the amount of the dividends to be paid.
• B)The cash account must have a balance sufficient to pay the dividends.
• C)The board of directors must have declared the dividend before it can be paid.
• D)Loan covenants do not restrict the payment of dividends.

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