Which of the following statements is most correct?
A) Retained earnings, as reported on the balance sheet, represents the amount of cash a company has available to pay out as dividends to shareholders.
B) 70 percent of the interest received by corporations is excluded from taxable income.
C) 70 percent of the dividends received by corporations is excluded from taxable income.
D) None of the answers above is correct.
E) Answers a and c are correct.

Question

Quizplus · Accepted Answer

According to the US tax code, 70 percent of the dividends received by corporations is excluded from taxable income. Retained earnings on the balance sheet do not necessarily represent cash available to pay out as dividends, as the company may choose to reinvest those earnings back into the business. Choice B is incorrect as there is no specific percentage of interest received that is excluded from taxable income.

Which of the Following Statements Is Most Correct