Which of the Following Statements Is NOT True About When

question 74

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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Definitions:

Employment at Will

A doctrine in labor law that allows employers to terminate employees for any reason, unless it is illegal or violates an employment contract.

Common Law Doctrine

A principle or precedent set by previous court decisions, forming part of the body of law in common law jurisdictions, as opposed to statutory law.

Contract or Statute

Legal documents that establish rights and obligations; a contract is an agreement between parties, while a statute is a law enacted by a legislative body.

Vicarious Liability

A legal principle that holds an entity or individual responsible for the actions of another party, typically in an employer-employee relationship.