Which Statements Are True?:
I $\quad$ Dividends Can Not Be Paid Out of Amounts Contributed by Paid

question 22

Multiple Choice

Which statements are true?:
I. $\quad$ Dividends can not be paid out of amounts contributed by owners as share capital.
II. $\quad$ Directors must ascertain that the company is solvent before they pay a dividend.
III. $\quad$ As a general rule dividends must only be paid from profits.For this purpose profits includes reserves.
IV. $\quad$ For purposes of paying dividends profits are not limited to the current period.

• A)I and II only
• B)II only
• C)I, II, and IV only
• D)I, II, III and IV

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Definitions:

Regulatory Requirements

Rules and guidelines imposed by governing bodies that companies must follow to be compliant in their operational, financial, or ethical practices.

Full Goodwill Method

An accounting approach that recognizes the full fair value of goodwill in the acquisition of a subsidiary, not just the portion attributable to the parent company.

Non-controlling Interest

A minority stake in a company, represented by shares that do not grant the shareholder the majority of voting power.

Acquired Goodwill

The excess value paid for a company over the fair value of its identifiable net assets during an acquisition.