Which of the Following Statements About a Cash Dividend Is

question 67

Multiple Choice

Which of the following statements about a cash dividend is incorrect?

• A) The legality of a cash dividend depends on state corporation laws.
• B) The legality of a dividend does not indicate a company's ability to pay a dividend.
• C) Dividends are not a liability until declared.
• D) Shareholders usually vote to determine the amount of income to be distributed in the form of a dividend.

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Definitions:

Price-Taker

An economic agent (e.g., a firm or consumer) that has no control over the market price and must accept prices as given.

Economic Profit

The surplus achieved when total revenue exceeds the opportunity costs of all resources used in production.

Monopolistically Competitive

A market structure characterized by many firms offering products that are similar but not identical, leading to competition based on factors other than price.

Advertising

The action of calling public attention to products, services, events, or concepts, usually through paid announcements by an identified sponsor.