Which One of the Following Is Correct for a Firm

question 87

Multiple Choice

Which one of the following is correct for a firm with $400,000 in net earnings,50,000 shares,and a 30% payout ratio?

• A) Retained earnings will increase by $120,000.
• B) Each share will receive a $1.20 dividend.
• C) $120,000 will be spent on new investments.
• D) The dividend per share will be $2.40.

Comprehend the concept of adjusting entries and their importance in preparing financial statements.

Identify and classify assets as current or long-term within a classified balance sheet.

Recognize and categorize different types of liabilities on a classified balance sheet.

Calculate and interpret the current ratio and its implications for a business’s short-term financial health.

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Definitions:

Parallel Forms Validity

The degree to which two different forms of a test measure the same attributes or content.

Measure

A method or tool used to assess, quantify, or determine the level or degree of a variable or attribute.

Validity

Validity refers to the extent to which a concept, conclusion, or measurement is well-founded and likely corresponds accurately to the real world.

Content Validity

The extent to which a test or measure covers the content it's supposed to cover.