A Calendar-Year Corporation Has Positive Current E&P of $500 and Accumulated

question 28

Multiple Choice

A calendar-year corporation has positive current E&P of $500 and accumulated negative E&P of $1,200.The corporation makes a $400 distribution to its sole shareholder.Which of the following statements is true?

• A)The distribution will not be a dividend because total earnings and profits is a negative $700.
• B)The distribution may be a dividend,depending on whether total earnings and profits at the date of the distribution is positive.
• C)The distribution will be a dividend because current earnings and profits is positive and exceeds the distribution.
• D)A distribution from a corporation to a shareholder is always a dividend,regardless of the balance in earnings and profits.

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Definitions:

Risk Aversion

A tendency to avoid taking risks, favoring safer options when making decisions.

Public Sphere

An area in social life where individuals can come together to freely discuss and identify societal problems, and through that discussion influence political action.

Private Sphere

Refers to the realm of individual life, family, and intimacy, as opposed to the public sphere which involves collective society and state mechanisms.

Chivalry Hypothesis

The theory suggesting that women are treated more leniently than men by the criminal justice system, based on traditional gender norms.