Retained Earnings Are Occasionally Restricted

question 83

Multiple Choice

Retained earnings are occasionally restricted

• A)to set aside cash for dividends.
• B)to keep the legal capital associated with share capital intact.
• C)due to contractual loan restrictions.
• D)if preferred dividends are in arrears.

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Definitions:

Promissory Note

A written promise to pay a specified amount of money to a designated person or entity by a certain date or on demand.

Maker

The individual or entity that creates or signs a negotiable instrument, committing to pay the specified sum to the holder.

Negotiable

Capable of being transferred or converted into cash or equivalent value, often used in reference to financial instruments.

Payable on Demand

Refers to a financial obligation that must be paid by the debtor when the creditor requests it.