Greener Grass Co

question 76

Multiple Choice

Greener Grass Co.pays a constant annual dividend of $1 a share and has 1,000 shares of common stock outstanding.The company

• A)must always show a current liability on its balance sheet of $1,000 for dividends payable.
• B)must still declare each dividend before it becomes an actual company liability.
• C)is obligated to continue paying $1 a share each year.
• D)can deduct $1,000 a year as a business expense as a result of its dividend payment.
• E)can be forced into bankruptcy by its shareholders if it fails to pay at least $1 a year in dividends.

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Definitions:

Owner's Equity

The remaining value of an entity's assets after all debts have been subtracted, indicating the stake of shareholders or owners in the company.

Net Income

The net income of a business once all costs, such as operational expenditures and taxes, have been deducted.

Revenue

The total amount of money received by a company for goods sold or services provided during a specific period.

Expense

An outflow of money to another person or entity to pay for an item or service or for a category of costs.