Asked by Brady Kelly on Jun 20, 2024
Verified
Legal capital
A) can be distributed to shareholders.
B) does not need to remain invested in the corporation.
C) can be distributed to shareholders up to the limit of their investment.
D) cannot be distributed to the shareholders but must remain invested in the corporation.
Legal Capital
The amount of capital that must be maintained in the business as a safeguard for creditors, represented by the par value of issued shares.
- Understand the concept of legal capital and its implications for shareholder distributions.
Verified Answer
KC
Katherine CalimlimJun 23, 2024
Final Answer :
D
Explanation :
Legal capital is the portion of a company's equity that cannot be distributed to shareholders and must remain in the business to protect creditors.
Learning Objectives
- Understand the concept of legal capital and its implications for shareholder distributions.