A Restriction of Retained Earnings Is Most Likely to Be

question 89

Multiple Choice

A restriction of retained earnings is most likely to be required by

• A) incurring a net loss in the current year.
• B) incurring a net loss in the prior year.
• C) purchasing treasury stock.
• D) reissuing treasury stock.

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Definitions:

Earnings Per Share

A financial metric that divides a company's profit available to shareholders by the outstanding shares, indicating the profitability on a per-share basis.

Required Rate Of Return

The minimum annual percentage of gain an investment must generate to be considered acceptable to an investor.

Non-Voting Common Stock

Shares that give the shareholder ownership rights in a company but do not grant voting power in corporate decisions.

Coattail Provision

A clause in a shareholder agreement protecting minority shareholders by enabling them to join in the sale of a company if a majority shareholder sells their stake.