Are All Decreases to Cash the Result of an Unfavorable

question 9

Multiple Choice

Are all decreases to cash the result of an unfavorable situation?

• A)Yes, decreases to cash are always bad.
• B)No, cash could decrease as a result of acquiring long-term assets which the company needs to expand or stay competitive.
• C)Yes, cash could decrease as a result of paying off long-term debt which is an unfavorable action to take.
• D)No, cash could decrease because the company issued more stock.

Distinguish between common and preferred stock in terms of rights and characteristics.

Understand and record transactions involving treasury stock, including purchases and sales.

Identify and compute dividends, including the treatment of cumulative and noncumulative preferred dividends and the concept of dividends in arrears.

Recognize the differences between authorized, issued, and outstanding shares, and their impact on equity structure.

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Definitions:

Economic Concern

Issues or situations that affect the well-being of an economy, such as inflation, unemployment, and economic growth.

Double-Digit Inflation

An inflation rate that reaches or exceeds 10%, indicating rapid increases in prices.

Double-Digit Unemployment

A situation where the unemployment rate reaches or exceeds 10 percent, indicating a high level of joblessness.

Stagflation

A condition of slow economic growth and relatively high unemployment—a period of stagflation—accompanied by rising prices (inflation).