Which of the Following Statements Is CORRECT

question 6

Multiple Choice

Which of the following statements is CORRECT?

• A) If a company pays more in dividends than it generates in net income,its retained earnings as reported on the balance sheet will decline from the previous year's balance.
• B) Dividends paid reduce the net income that is reported on a company's income statement.
• C) If a company uses some of its bank deposits to buy short-term,highly liquid marketable securities,this will cause a decline in its current assets as shown on the balance sheet.
• D) If a company issues new long-term bonds during the current year,this will increase its reported current liabilities at the end of the year.
• E) Accounts receivable are reported as a current liability on the balance sheet.

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Definitions:

Capacity

The maximum output that a company can produce under normal conditions over a given period of time.

Marginal Costs

The uplift in total financial outlay required for the making of another unit of a product or service.

Cournot Duopolists

Firms in a market where only two producers exist and compete under the Cournot assumption, where each firm decides its production level assuming the output of its competitor is fixed.

Demand for Wine

The total quantity of wine that consumers are willing and able to purchase at various prices within a specific time period.