Dividends can't be paid by a(n)_____firm and must come from current or prior earnings.

Name: Dividends can't be paid by a(n)_____firm and must come from current or prior earnings.
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Question

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Dividends are distributions of a company's earnings to its shareholders and can only be paid out of current or prior earnings. An insolvent firm, which is unable to pay its debts as they come due, cannot afford to pay dividends because it does not have sufficient funds or profits.

Dividends Can't Be Paid by A(n)_____firm and Must Come from Current