If a Corporation Distributes Cash to Its Shareholders, Then

question 206

Multiple Choice

If a corporation distributes cash to its shareholders, then

• A) there has been a violation of accounting principles.
• B) equity will increase.
• C) equity will decrease.
• D) there will be a new liability showing the shareholders owe money to the business.

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Definitions:

Fiduciary Duty

An obligation to act in the best interest of another party, typically in financial or trust relationships.

Legal Position

A stance or argument made based on laws, regulations, and case law in litigation or legal matters.

Chauffeur

A person employed to drive a private or hired car, especially a luxury vehicle typically for someone else.

BMW

A German multinational corporation that produces luxury vehicles and motorcycles.