After satisfying obligations to creditors, the government, and preferred stockholders, any remaining earnings will most likely be allocated to any of the following EXCEPT
A) common shareholders as cash dividends.
B) common shareholders as stock dividends.
C) retained by the firm for future investment.
D) a combination of retained earnings and cash dividends.

Question

Quizplus · Accepted Answer

Any remaining earnings after satisfying obligations to creditors, government, and preferred stockholders can be allocated to common shareholders as cash dividends or retained by the firm for future investment. Additionally, a combination of retained earnings and cash dividends can also be utilized. However, stock dividends are not typically used as a means of distributing remaining earnings to common shareholders.

After Satisfying Obligations to Creditors, the Government, and Preferred Stockholders