Which of the Following Would Be a Reason for a Company

question 113

Multiple Choice

Which of the following would be a reason for a company to appropriate a portion of retained earnings?

• A) To ensure that the business does not take on too much debt
• B) To increase the amount of earnings available for dividends
• C) To help the company control levels of operating expenses
• D) To limit the amount of retained earnings available for dividends, in order to retain sufficient funds for growth

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Definitions:

Profit

The financial gain realized when the revenue from a business activity exceeds the expenses, costs, and taxes involved in sustaining the activity.

Uniform Commercial Code

A comprehensive set of laws governing all commercial transactions in the United States, intended to standardize and make uniform the regulations across the states.

Inventory Purchasing

The process of acquiring goods and materials that a company intends to sell in its normal business operations.

Sporting Goods Store

A retail business specializing in the sale of sports equipment and related items for various physical activities and sports.