Which of the Following Best Describes Restrictions on Cash Dividends

question 120

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:

Compensatory Damages

Financial compensation awarded to a plaintiff to redress the loss or injury that has been suffered.

Punitive Damages

Monetary compensation awarded to an injured party that goes beyond what is necessary to compensate for losses and is intended to punish the wrongdoer.

Unconscionable

Something that is shockingly unfair or unjust, often used in a legal context to describe terms that are extremely one-sided.

Sabbath Laws

Regulations related to the observance of the Sabbath, the day of rest in some religions, affecting business operations, work, and activities on this day.