Use the Information Above to Answer the Following Question

question 29

Multiple Choice

Use the information above to answer the following question.If the company pays the fixed dividend on the preferred stock,the transaction will:

• A)decrease Preferred stock by $20,000.
• B)decrease Retained earnings by $600,000.
• C)decrease Cash by $20,000.
• D)increase Liabilities by $20,000.

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Definitions:

WorldCom

A telecommunications company that was involved in one of the largest accounting fraud scandals in history, leading to its bankruptcy in 2002.

Volcker Rule

Part of the Dodd-Frank Wall Street Reform and Consumer Protection Act that restricts U.S. banks from making certain kinds of speculative investments that do not benefit their customers.

Proprietary Trading

When a firm trades stocks, bonds, currencies, commodities, derivatives, or other financial instruments with its own money, rather than its clients' money, for its own profit.

Hedge Funds

Investment funds that use various strategies to earn active returns for their investors, often employing leverage and derivatives.