Which of the following statements is TRUE?

Question

Quizplus · Accepted Answer

Restrictions on retained earnings refer to limitations or conditions placed on the use of a company's earnings that have been retained instead of being distributed as dividends to shareholders. Such restrictions are usually reported in the notes to the financial statements, rather than on the income statement or requiring adjusting journal entries. The purpose of restrictions on retained earnings is not necessarily to maximize dividends paid to shareholders, but rather to ensure the funds are used for specific purposes, such as investing in growth opportunities or paying off debt.

Which of the Following Statements Is TRUE