Statutory restrictions on dividend payments include all of the following EXCEPT
A) if liabilities exceed assets.
B) if the amount of the dividend exceeds the firm's retained earnings.
C) if the dividend is being paid from capital invested in the firm.
D) if, because of the dividend payment, the firm intends to sell new common stock to fund its capital budget.

Question

Quizplus · Accepted Answer

Statutory restrictions on dividend payments do not include whether the firm intends to sell new common stock to fund its capital budget. However, paying dividends from capital invested in the firm, if liabilities exceed assets, and if the amount of the dividend exceeds the firm's retained earnings are all factors that can restrict dividend payments.

Statutory Restrictions on Dividend Payments Include All of the Following