ReGen, Inc

question 59

Essay

ReGen, Inc. would like to pay a dividend to its shareholders. It has only been in business a two years and does not yet have any retained earnings. However, it has a new product, which is breaking all sales records. This quarter, it anticipates about $3 million in earned surplus. It should be able to pay all of its bills as they become due. Under which of the following tests would ReGen be able to pay a dividend? Explain each test.
a. Earned surplus test
b. Surplus test
c. Net asset test

---

Definitions:

Cognitive Mapping

The mental process by which individuals acquire, code, store, recall, and decode information about their spatial environment.

Vicarious Learning

The process of learning through observing the actions and consequences of others' behavior, rather than through direct experience.

Latent Learning

Acquisition of knowledge that happens without apparent rewards or reinforcements for the behaviors or associations being learned.

Operant Conditioning

A technique in teaching that relies on the application of rewards and disciplining to influence behavior.