The Revised Act Permits a Corporation to Purchase, Redeem, or Otherwise

question 19

Multiple Choice

The Revised Act permits a corporation to purchase, redeem, or otherwise acquire its own shares unless:

• A) the corporation's total assets after the distribution would be less than the sum of its total liabilities and the maximum amount that then would be payable for all outstanding shares having preferential rights in liquidation.
• B) the corporation would be unable to pay its debts as they became due in the usual course of its business.
• C) Both of these are correct.
• D) None of these are correct.

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Definitions:

Net Income

The net income of a company, which is calculated by deducting all costs and taxes from its total earnings.

Break-Even Point

The production level or sales volume at which total revenues equal total expenses, resulting in no net loss or gain.

Contribution Margin Ratio

A financial metric that represents the percentage of sale price that remains after variable costs are subtracted.

Sales Dollars

The total amount of money generated from the sale of goods or services before any expenses are subtracted.