Generally Accepted Accounting Standards require profitable companies to distribute some of their profits to their stockholders.

Question

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Generally Accepted Accounting Standards (GAAP) do not require profitable companies to distribute their profits to their stockholders. Instead, companies can choose to retain their profits for reinvestment in the business, paying down debt, or other uses. However, some companies may choose to distribute a portion of their profits through dividends to their stockholders as a way to reward them for investing in the company.

Generally Accepted Accounting Standards Require Profitable Companies to Distribute Some