Which of the following statements is incorrect? A. Dividend payments can be influenced by cash availability. B.Dividends shall not be paid out of assets to protect the creditors. C. Corporations must pay their investors dividends so they will not be charged penalty for improper accumulation. D. Additional funding may be sourced from retained earnings.

Which of the following statements is incorrect? A. Dividend payments can be influenced by cash availability. B.Dividends shall not be paid out of assets to protect the creditors. C. Corporations must pay their investors dividends so they will not be charged penalty for improper accumulation. D. Additional funding may be sourced from retained earnings.

Auditing: A Risk Based-Approach (MindTap Course List)

11th Edition

ISBN:9781337619455

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter13: Auditing Debt, Equity, And Long-term Liabilities Requiring Management Estimates

Section: Chapter Questions

Problem 10CYBK

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Question

Which of the following statements is incorrect?

A. Dividend payments can be influenced by cash availability.

B.Dividends shall not be paid out of assets to protect the creditors.

C. Corporations must pay their investors dividends so they will not be charged penalty for improper accumulation.

D. Additional funding may be sourced from retained earnings.

Definition Definition Remaining net income of the company after the required dividends are paid to shareholders. This surplus money is usually invested back into the business to expand its business operations or launch a new product.

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