Identify Which of the Following Statements Is False

question 19

Multiple Choice

Identify which of the following statements is false.

• A)For E&P dividend distribution purposes, property as defined in Sec. 317(a)includes money.
• B)The function of E&P is to provide a measure of a corporation's economic ability to pay dividends.
• C)At formation, a corporation's E&P depends on the amount of capital contributed by the shareholders.
• D)Adjustments to taxable income when computing E&P do not include tax-exempt interest.

---

Definitions:

Preferred Dividends

Dividends that are paid out to preferred shareholders at a fixed rate before any dividends are paid to common shareholders.

Paid-in Capital

The total amount of money that shareholders have directly invested in a company by purchasing shares during initial offerings or via the secondary market.

Stockholders' Equity

The residual interest in the assets of a corporation that remains after deducting its liabilities, representing ownership interest.

Stock Dividend

A dividend payment made in shares rather than cash, increasing the total number of shares owned by shareholders.