Firms are usually prohibited by state law from distributing
A) retained earnings as dividends.
B) paid-in capital as dividends.
C) dividends in a year the firm has a net loss.
D) assets as dividends.

Question

Quizplus · Accepted Answer

Paid-in capital is the amount of money that shareholders have invested in the company, and it is typically not allowed to be distributed as dividends because it represents the equity capital of the company, which is meant to be used for business operations and growth.

Firms Are Usually Prohibited by State Law from Distributing