The Major Accounting Difference Between Interest Expense for Creditors and Dividends

question 45

Multiple Choice

The major accounting difference between interest expense for creditors and dividends declared and paid to shareholders is that interest expense:

• A)decreases retained earnings and dividends increase retained earnings.
• B)impacts cash flows, while dividends do not.
• C)is not on the income statement while dividends declared and paid are.
• D)is on the income statement and dividends declared and paid are not.

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Definitions:

Cronbach's Alpha

A measure of internal consistency that assesses how closely related a set of items are as a group, often used in survey research.

Internal Consistency

A measure of the reliability of a psychological test that assesses the extent to which different test items that propose to measure the same general construct produce similar results.

Cohen's Kappa

Cohen's Kappa is a statistical measure used to assess the reliability of inter-rater agreement for qualitative (categorical) items, correcting for the chance of agreement.

Item-total Correlation

The relationship between individual item scores and the overall score across all items in a test or questionnaire.