Which One of the Following Statements Is Correct Concerning a Corporation

question 35

Multiple Choice

Which one of the following statements is correct concerning a corporation with taxable income of $125,000?

• A)Net income minus dividends paid will equal the ending retained earnings for the year.
• B)An increase in depreciation will increase the operating cash flow.
• C)Net income divided by the number of shares outstanding will equal the dividends per share.
• D)Interest paid will be included in both net income and operating cash flow.
• E)An increase in the tax rate will increase both net income and operating cash flow.

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Definitions:

Profits

The financial gain realized when the amount earned from a business activity exceeds the expenses, costs, and taxes involved in sustaining the activity.

Output

The total amount of goods or services produced by a company, industry, or economic system.

Marginal Costs

The additional cost incurred to produce an extra unit of a product or service.

Average Costs

The total costs of production divided by the number of units produced, representing the cost per unit.