Which of the Following Would Be Most Likely to Lead

question 11

Multiple Choice

Which of the following would be most likely to lead to a decrease in a firm's dividend payout ratio?

• A) Its earnings become more stable.
• B) Its access to the capital markets increases.
• C) Its R&D efforts pay off, and it now has more high-return investment opportunities.
• D) Its accounts receivable decrease due to a change in its credit policy.
• E) Its stock price has increased over the last year by a greater percentage than the increase in the broad stock market averages.

---

Definitions:

Closing Entries

These are journal entries made at the end of an accounting period to transfer temporary accounts to permanent accounts, hence preparing the books for the next period.

Revenue Accounts

Accounts used to record the income generated from the sale of goods or services in the normal course of business.

Expense Accounts

Accounts in financial accounting that track the costs of operating a business, including costs for materials, labor, and overhead.

Permanent Accounts

These are balance sheet accounts whose balances are carried forward from one accounting period to the next, including assets, liabilities, and equity accounts.