Which of the Following Statements About Retained Earnings Restrictions Is

question 74

Multiple Choice

Which of the following statements about retained earnings restrictions is incorrect?

• A) Many states require a corporation to restrict retained earnings for the cost of treasury stock purchased.
• B) Long-term debt contracts may impose a restriction on retained earnings as a condition for the loan.
• C) The board of directors of a corporation may voluntarily create retained earnings restrictions for specific purposes.
• D) Retained earnings restrictions are generally disclosed through a journal entry on the books of a company.

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Definitions:

Motivated Forgetting

A theoretical concept suggesting that people may forget unwanted information, either consciously or unconsciously, as a defense mechanism.

Time Decay

The reduction in value of an option or other derivative as the expiration date approaches.

Retroactive Interference

A phenomenon where newly learned information interferes with the recall of previously learned information.

Proactive Interference

The tendency for previously learned material to hinder subsequent learning.