Which of the following can be distributed to shareholders?

• A. Surplus
• B. Par value
• C. All assets
• D. Stated capital

Answer: (A)

Distributions to shareholders come from surplus—the part of a corporation’s net assets that is available for dividends after meeting capital requirements. Surplus represents funds above the stated capital that can be paid out to owners without harming the company’s creditor protection.

Par value is just the nominal value assigned to shares and is part of the capital that must be preserved; it isn’t a source for regular distributions. Stated capital is the contributed capital that the corporation is generally not allowed to reduce through distributions. All assets would only be distributable in a liquidation after creditors are paid, not as a routine dividend. So the only disclosable, ongoing source for distributions is surplus.