Which of the Following Statements Best Describes the Role of Current

question 7

Multiple Choice

Which of the following statements best describes the role of current and accumulated earnings and profits in determining if a distribution is a dividend?

• A) A distribution will only be a dividend if total earnings and profits (current plus accumulated) is positive at the time of the distribution.
• B) A distribution can never be a dividend if current earnings and profits are negative.
• C) At a minimum, some portion of the distribution will be a dividend if current earnings and profits for the year are positive, even if accumulated earnings and profits are negative.
• D) A distribution will never be a dividend if current earnings and profits for the year are negative, even if accumulated earnings and profits is positive.

---

Definitions:

Aspect

A particular part or feature of something.

Studied

Carefully examined or analyzed a subject, phenomenon, or data to gain a deeper understanding or insight.

Foster

To encourage or promote the development of something, typically something seen as positive.

Influence

The power or ability to affect or change someone's beliefs, actions, or decisions, often through persuasion or example.