Which of the Following Is Not a Legal Restriction Related

question 28

Multiple Choice

Which of the following is not a legal restriction related to profit distributions by a corporation?

• A)The amount distributed to owners must be in compliance with the laws governing corporations.
• B)The amount distributed in any one year can never exceed the net income reported for that year.
• C)Profit distributions must be formally approved by the board of directors.
• D)Dividends must be in full agreement with the capital contracts as to preferences and participation.

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Definitions:

Compounded Monthly

Interest calculation method where interest earned is added to the principal so that, from that moment on, the interest that has been added also earns interest.

Equal Contributions

A setup where all participants in a financial arrangement contribute the same amount.

Retirement Plan

A financial strategy designed to provide individuals with income or assets to rely on after they have ceased working, often involving savings, investments, and other financial products.

Compounded Semi-annually

This refers to the practice of applying interest to an existing amount plus any accumulated interest twice yearly.