A Liquidating Dividend

question 52

Multiple Choice

A liquidating dividend:

• A)Occurs only when a company is going out of business.
• B)Occurs when a corporation pays a dividend that exceeds the balance in the retained earnings account.
• C)Is an expense to the corporation.
• D)Occurs only when the corporation has a loss for the year.

---

Definitions:

Chattel Paper

A document or records indicating both a monetary obligation and a security interest in or lease of specific goods.

Collateral

Assets or property offered as security for a loan, to be forfeited in the event of default.

Perfected Purchase

A legal status in property law where the buyer obtains the rights to the property free from any prior claims or liens.

Money Security Interest

A legal claim or lien on collateral (such as cash or deposit accounts) provided by a debtor to secure a loan or other credit, ensuring the lender has a priority claim over the funds in the case of default.