Assume the Current Share Price of Company a Is $4

question 14

Multiple Choice

Assume the current share price of Company A is $4.50 and on the following day these shares will begin trading ex-dividend.If the dividend is 20 cents per share,what is the expected ex-dividend share price?

• A)$4.50
• B)$4.70
• C)$4.30
• D)$3.60

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Definitions:

Uncollectible Accounts

Accounts receivable deemed uncollectible by a business, representing money owed by customers that is unlikely to be paid and usually written off as an expense.

Expense Recognition Principle

An accounting guideline stating that expenses should be recorded in the same period as the revenues they help to generate.

Direct Write-off Method

An accounting method for uncollectible receivables where the specific account's balance is directly removed from accounts receivable.

Allowance Method

A technique in accounting used to adjust accounts receivable for the amount estimated to be uncollectible.