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:

Crystallized Intelligence

The capacity to apply acquired understanding and past encounters.

Fluid Intelligence

The capability to think logically and solve problems in novel situations, independent of acquired knowledge.

"g" Factor

A construct used in psychology to describe the common intelligence that underlies performance on various cognitive tasks.

Intellectual Skills

The capabilities related to thinking, reasoning, and understanding that are used to solve problems, make decisions, and grasp complex ideas.