Which of the Following Statements Is True About Retained Earnings

question 99

Multiple Choice

Which of the following statements is true about retained earnings?

• A)Retained earnings represents cash available to pay dividends to stockholders.
• B)Retained earnings cannot be restricted by loan covenants.
• C)Retained earnings generally consists of cumulative net income less any net losses and dividends since inception.
• D)Retained earnings is reduced by the par value of stock splits.

---

Definitions:

Chapter 11

A provision of the United States Bankruptcy Code that allows for reorganization of a debtor's business affairs and assets.

Reorganization

A process by which a company or entity changes its structure, operations, or financial setup, often to recover from financial distress or improve efficiency.

Liquidation

The process of closing a business and distributing its assets to claimants, typically when it is insolvent.

Bankruptcy Court Judges

Judges specializing in overseeing bankruptcy cases, making decisions on the dischargeability of debts and other related matters.