Which of the Following Statements Is TRUE

question 80

Multiple Choice

Which of the following statements is TRUE?

• A) Restrictions on retained earnings require adjusting journal entries.
• B) Restrictions on retained earnings are usually reported in the notes to the financial statements.
• C) Restrictions on retained earnings are disclosed on the income statement.
• D) Restrictions on retained earnings are designed to maximize dividends paid to shareholders.

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Definitions:

Equal Dignity Rule

A legal doctrine requiring that contracts authorizing someone to conduct a transaction must be executed with the same formality as required for the transaction itself.

Statute of Frauds

A legal doctrine requiring certain types of contracts, such as for the sale of land or goods over a certain value, to be in writing to be enforceable.

Respondeat Superior

A legal doctrine holding employers liable for wrongful acts committed by employees while performing their job duties.

Independent Contractor

A person or entity contracted to perform work for another entity as a non-employee, responsible for their own taxes and benefits.