Which One of the Following Statements Related to Corporate Dividends

question 109

Multiple Choice

Which one of the following statements related to corporate dividends is correct?

• A)Dividends are nontaxable income to shareholders.
• B)Dividends reduce the taxable income of the corporation.
• C)The Chief Executive Officer of a corporation is responsible for declaring dividends.
• D)The Chief Financial Officer of a corporation determines the amount of dividend to be paid.
• E)Corporate shareholders may receive a tax break on a portion of their dividend income.

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Definitions:

Liquidated-Damage Clause

A contract provision that specifies a predetermined amount of money that must be paid as damages for failure to perform under the contract.

Punitive Nature

Refers to measures or penalties intended to punish individuals or entities for wrongdoing, often in addition to compensatory damages.

Voidable

A term applied to a contract that one or both parties have the ability to either withdraw from or enforce.

Insolvent Buyer

A purchaser who is unable to meet financial obligations or pay debts as they come due.