Which of the Following Statements Is Correct

question 98

Multiple Choice

Which of the following statements is correct?

• A) There have been no significant observed differences in the capital structures of U.S.corporations in comparison to their German and Japanese counterparts.
• B) Different countries use essentially the same international accounting conventions with respect to reporting assets on a historical versus replacement cost basis.
• C) An analysis of both bankruptcy and equity reporting costs leads to the conclusion that U.S.firms should have more equity and less debt than firms in Japan and Germany.
• D) Equity monitoring costs are higher in the United States than in Japan and Germany.
• E) Debt monitoring costs are probably lower in the United States than in Japan and Germany.

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Definitions:

Net Sales

Net Sales is the revenue generated from sales of products or services, after deducting returns, allowances for damaged or missing goods, and discounts.

Book Value Per Share

A measure of a company's equity value as per its financial statements, divided by the number of outstanding shares.

Common Stock

Equity securities that represent ownership in a company, entitling the shareholder to voting rights and a share of the company's profits in the form of dividends.

Retained Earnings

The portion of net earnings not paid out as dividends but retained by the company to be reinvested in its business or to pay debt.