Restrictions on retained earnings are ________.
A) reported on the statement of cash flows
B) usually reported in the notes to the financial statements
C) reported on the income statement
D) designed to maximize dividends paid to shareholders

Question

Quizplus · Accepted Answer

Restrictions on retained earnings, such as requirements to maintain a certain level of reserves or use the earnings for specific purposes, are typically disclosed in the notes to the financial statements. They are not reported on the statement of cash flows or income statement. The purpose of these restrictions can vary but is generally not designed solely to maximize dividends paid to shareholders.

Restrictions on Retained Earnings Are ________