Exhibit 12-2 Lorenz Curve

question 122

Multiple Choice

Exhibit 12-2 Lorenz curve
-As shown in Exhibit 12-2, 80 percent of families earned a cumulative share of about ____ of income.

• A) 5 percent
• B) 15 percent
• C) 30 percent
• D) 50 percent

Identify the principles of accrual accounting, including the recognition of revenues and expenses.

Recognize the definitions and treatment of prepaid expenses, accrued expenses, and deferred revenues.

Relate the effect of proper and improper adjustments on financial statements’ accuracy and completeness.

Understand the concepts of book value, depreciation, and the adjustment for depreciation.

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Definitions:

Predictable Dividend Payout

Regular, forecastable payments made by a company to its shareholders, usually as a part of the firm's profit sharing mechanism.

Clientele Effect

The theory that a company’s stock price will move according to the demands and preferences of its investors or clientele regarding dividend policies.

Tax-Exempt Institutional

Refers to entities or investment products that do not have to pay federal or state income taxes.

Low Dividend Policy

A corporate practice of distributing minimal portions of the company's earnings to its shareholders as dividends.