Which of the Following Statements About the Use of Financial

question 46

Multiple Choice

Which of the following statements about the use of financial statements is not correct?

• A)When choosing between a company that pays steady dividends and one that retains its earnings to support future growth,investors will always choose the company that pays steady dividends.
• B)Companies can develop reputations for honest financial reporting even when conveying bad news.
• C)Trends in a company's net income from year to year can provide clues about its future earnings,which can help investors to decide whether to buy stock in the company.
• D)Information in the notes to the financial statements can influence a user's interpretation of balance sheet and income statement information.

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Definitions:

Underground Railroad

A network of secret routes and safe houses established in the United States during the early to mid-19th century, used by African-American slaves to escape into free states and Canada.

Canada

A country in North America, known for its vast landscapes, multicultural communities, and bilingual (English and French) character.

Trains

Rail vehicles for the transportation of goods and passengers along railways.

Wilmot Proviso

An unsuccessful 1846 proposal in the United States aiming to ban slavery in territory acquired from Mexico.