Which of the Following Is an Example of Restructuring the Firm

question 105

Multiple Choice

Which of the following is an example of restructuring the firm?

• A)dividends are increased from $1 to $2 per share.
• B)a new investment increases the firm's business risk.
• C)new equity is issued and the proceeds repay debt.
• D)a new board of directors is elected to the firm.

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Definitions:

Contra Asset

An account on a company's balance sheet that reduces the total amount of an asset, such as accumulated depreciation.

Normal Balance

In accounting, the normal balance is the side (debit or credit) of an account that is usually increased. For example, asset accounts normally have a debit balance, while liabilities and equity accounts have a credit balance.

Direct Write-off Method

A method of accounting for bad debts that involves charging the amount of an uncollectible account directly to the expense account when it is deemed non-recoverable.

Uncollectible Receivables

Debts owed to a company that are considered to be uncollectable and are written off as a loss.