Which One of the Following Is Not a Reason Why

question 99

Multiple Choice

Which one of the following is not a reason why a corporation's ability to pay dividends may be restricted?

• A)An agreement with bondholders may require that the balance of retained earnings be maintained at a minimum level.
• B)The board of directors may set aside designated amounts for future expansion or other business purposes.
• C)State laws may require that the retained earnings balance cannot fall below the cost of treasury stock.
• D)The corporate charter may require that transactions with nonowners be excluded from retained earnings.

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Definitions:

Not-for-Profit Organizations

Entities that operate for purposes other than making a profit, often focusing on social, educational, or humanitarian objectives.

Ultimate Consumers

The end users of a product or service, typically individuals who purchase for personal use rather than for resale or manufacturing.

Organizational Buyers

Entities such as businesses, governments, and institutions that purchase goods and services for organizational use, not for personal consumption.

Industrial Market

The market for goods and services that are purchased for use in the production of other products or for resale within industries and businesses.