The Capital Impairment Restriction, a Legal Constraint on Dividend Payments

Multiple Choice

The capital impairment restriction, a legal constraint on dividend payments, states that ____.

A) only the current year's earnings may be used for dividend payments
B) dividends may not be paid out of stockholders' equity
C) a firm's capital cannot be used to make dividend payments
D) a firm's capital surplus can be used to make dividend payments