Which of the Following Statements About When Cash Dividends Can

question 262

Multiple Choice

Which of the following statements about when cash dividends can be paid is not correct?

• A)The Retained Earnings account must have an accumulated balance sufficient to cover the amount of the dividends to be paid.
• B)The Cash account must have a balance sufficient to pay the dividends.
• C)The board of directors must have declared the dividend before it can be paid.
• D)Loan covenants cannot restrict the payment of dividends.

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