A Shareholder's Obligation to Repay an Illegally Declared Dividend Depends

question 30

Multiple Choice

A shareholder's obligation to repay an illegally declared dividend depends on:

• A) the shareholder's good or bad faith in accepting the dividend.
• B) the solvency or insolvency of the corporation and,in some instances,special statutory provisions.
• C) the shareholder's knowledge of the facts.
• D) All of these.

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Definitions:

Mixed Costs

Expenses that have both a fixed and variable component, changing in total with the level of activity but also including a constant element.

Fixed Costs

Fixed costs are expenses that remain constant for a company regardless of how much it produces or sells, such as rent, salaries, and insurance premiums.

Variable Costs

Costs that fluctuate in direct proportion to the amount of production or sales figures.