Which of the Following BEST Describes Restrictions on Cash Dividends

question 40

Multiple Choice

Which of the following BEST describes restrictions on cash dividends and treasury stock purchases?

• A) Restrictions on cash payments that are made to ensure higher reported profits
• B) Limits required by lenders or creditors to ensure that the company maintains adequate levels of equity
• C) Restrictions on payments made by the shareholders to lower federal income tax expense
• D) Limits that are established to boost sales revenues

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Definitions:

Disparagement

A business tort that occurs when a statement is intentionally used to defame a business product or service.

Negligent Misrepresentation

A false statement made carelessly that leads another to act on it to their detriment.

Reasonable Care

A legal standard that requires individuals to act with the same level of care that a reasonably prudent person would exhibit in the same situation.

Fraudulent Misrepresentation

An intentional false statement of a material fact made by one party to induce another party to enter into a contract, resulting in harm or loss.