Retained Earnings Are Often Appropriated While the Bonds Are Outstanding

question 39

Multiple Choice

Retained earnings are often appropriated while the bonds are outstanding. Which of the following is a reason for the appropriation?

• A) Corporation management wants to protect the bondholders.
• B) The bond contract or the board of directors requires it.
• C) Tax law requires it.
• D) The buyers require it.

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Definitions:

Corporate Codes

Sets of principles and ethics that a company agrees to follow, often relating to social responsibility, environmental policies, and employee relations.

Adopting

The act or process of choosing or accepting something new, such as ideas, technologies, behaviors, or practices, and integrating them into use or practice.

International Investment Portfolios

Collections of international financial assets including stocks, bonds, and other securities, held by investors to diversify risks and achieve financial goals across global markets.

Working Capital

The measure of a company's operational liquidity, calculated as current assets minus current liabilities.