A corporation is not allowed to issue dividends to shareholders unless it is solvent.

Name: A corporation is not allowed to issue dividends to shareholders unless it is solvent.
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Question

Quizplus · Accepted Answer

This statement is true. A corporation cannot issue dividends to shareholders if it is not solvent, as doing so could harm creditors and violate laws related to fraudulent conveyance. A solvent corporation is one that has enough assets to cover its debts and obligations, whereas an insolvent corporation does not.

A Corporation Is Not Allowed to Issue Dividends to Shareholders