Why are there legal restrictions on paying out the funds

Assignment Help Financial Accounting
Reference no: EM132974063

Dividend Policy and Retained Earnings

Problem 1: "Since initial contributed capital theoretically belongs to the stockholders, why are there legal restrictions on paying out the funds to the stockholders? Do you think this is fair?"

According to the article,"Dividends-Definitions and rights" It mentions that the dividend payments that are made by a company to one or more of their shareholders with the respect to it`s stock. Additionally, a part of the company profits has paid out stockholders. Moreover a dividend is considered a taxable income. As a result, these dividends are handled on a cash basis, store credits which include shares in the business either newly created shares or pre-existing shares for the shareholders. In fact ,normal cash dividends are paid out of a business profits to the shareholders. In my opinion, I don't think it is fair. The particular reason for the circumstance is that things have to get done well in order for be success. Furthermore, if funds were made to the company why have restrictions, if that money was donated it should be used for the company and employees.(Stimmel & Roeser 2021)

Reference no: EM132974063

Questions Cloud

Identify the key elements of brownand robbins : Identify the key elements of Brown's (1995) and Robbins (2001) methods of assessing organisational culture - CHOOSE EITHER BROWN OR ROBBINS
What is joy ann annual after tax salary now : When she had just started working for the administrative department five years ago her annual salary was $45,000 after taxes. What is Joy Ann annual after tax
Prepare the appropriate reversing entry : Assuming that reversing entries are made to facilitate the record-keeping process, prepare the appropriate reversing entry, if any, and the receipt of cash
Approach to managing human resources : 1. What is their approach to managing human resources?
Why are there legal restrictions on paying out the funds : Since initial contributed capital theoretically belongs to the stockholders, why are there legal restrictions on paying out the funds to the stockholders?
Philosophical worldview and research methodology : Each of us have unique experiences and perceptions that shape what we believe about the world. These beliefs and underlying assumptions affect our natural appro
Prepare journal entries to record the transactions : Prepare journal entries to record the transactions and closings for 2020 (assume the retirements were the f irst ever recorded by Zen Aerospace)
Undertake the development independently : LMD Investment has identified the Suva City Council owned Raiwaqa Market (or any project of your choice) as an under- performing asset and interested in working
What do you think is the changing role of business : What do you think is the changing role of business and identify 3 main contributions a professional accountant would make in building a better world

Reviews

Write a Review

Financial Accounting Questions & Answers

  What was the occupancy rate

In 2009, Hospital ABC had ALOS of 6.9, 453 beds, and 21,000 discharges. What was the occupancy rate in 2009

  What gsw cash outflows to inventory suppliers totaled

Accounts payable to suppliers increased by $10 million. If cost of goods sold was $650 million, GSW's cash outflows to inventory suppliers totaled

  What is the initial investment in the product

The product requires an immediate investment of $49,000 in plant and equipment. What is the initial investment in the product

  Calculate the remaining useful life of the machine

Calculate the (i) Remaining useful life of the machine, (ii) Annual depreciation of the machine, (iii) Purchase price of the machine

  Estimate the post-tax cash flows of the project

Plant and Machinery will be depreciated at the rate of 25% per year as per the written down method. Estimate the post-tax cash flows of the project

  Prepare the journal entry to record the sale and settlement

On February 9 Ernst gave Gonzalez Co. a 7% promissory note in settlement of this account. Prepare the journal entry to record the sale and the settlement of the accounts receivable.

  Prepare the journal entries for waleed company

Prepare the journal entries for Waleed Company. On December 1, Purchase office equipment of $3000, he issued 3-months note payable.

  Calculate the premium or discount on the bonds

The bonds were issued to yield 4% annually. X uses the effective interest rate method of bond amortization:- Calculate the premium or discount on the bonds

  What were marvel total long-term debt and total liabilities

At year-end 2018, Marvel Company total assets were $4.5 million, What were Marvel's total long-term debt and total liabilities in 2018?

  What is the total effect of the errors on amount of working

What is the total effect of the errors on the amount?What is the total effect of the errors on the balance of retained earnings at December 31, 2019.

  Describe the home buying process

Describe the home buying process. You have just graduated from post grad program with high honours and have obtained a job

  Make the entries of orstralia ltd to record the effects

Make the entries of Orstralia Ltd to record the effects of the management fee transaction and related cash balance in accordance with AASB

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd