Which of the Following Statements Is CORRECT

question 16

Multiple Choice

Which of the following statements is CORRECT?

• A)Dividends paid reduce the net income that is reported on a company's income statement.
• B)If a company uses some of its bank deposits to buy short-term, highly liquid marketable securities, this will cause a decline in its current assets as shown on the balance sheet.
• C)If a company issues new long-term bonds during the current year, this will increase its reported current liabilities at the end of the year.
• D)Accounts receivable are reported as a current liability on the balance sheet.
• E)If a company pays more in dividends than it generates in net income, its retained earnings as reported on the balance sheet will decline from the previous year's balance.

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Definitions:

Obey

To follow or comply with commands, restrictions, or instructions, often from an authority or rule.

Contract

An agreement that is enforceable by law, involving two or more parties, which stipulates their duties and entitlements.

Ratification

The act of officially approving an agreement or treaty, often by a vote or other formal decision.

Real Authority

The actual power given to an agent or representative to act on behalf of another person or entity in legal or business matters.