A liquidating dividend is:
A)Only declared when a corporation closes down.
B)A return of a part of the original investment back to the stockholders.
C)Not allowed under federal law.
D)Only paid in assets other than cash.
E)Only paid in shares of stock.

Question

Quizplus · Accepted Answer

A liquidating dividend is a distribution of the corporation's assets to stockholders after all debts and liabilities have been paid. It is a return of a portion of the original investment back to the stockholders. This typically happens when a corporation is closing down or when it has excess cash that it cannot invest profitably back into the business. It is allowed under federal law and can be paid in cash or other assets.

A Liquidating Dividend Is