Net Income Results When

question 229

Multiple Choice

Net income results when

• A) Assets > Liabilities.
• B) Revenues = Expenses.
• C) Revenues > Expenses.
• D) Revenues < Expenses.

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Definitions:

Projected Capital Budget

A forward-looking budget that outlines anticipated investments in projects and assets for the purpose of long-term growth.

Net Income

The net income of a business following the deduction of all costs and taxes from its overall revenue.

Residual Dividend Policy

A method where dividends are based on earnings minus capital expenditures and working capital needs; basically, dividends are paid from leftover or residual earnings.

Target Capital Structure

The mix of debt, preferred stock, and common equity with which the firm plans to finance its investments. Companies often target a specific structure to optimize their cost of capital.