Which of the Following Does Not Represent an Advantage of Retained

question 26

Multiple Choice

Which of the following does not represent an advantage of retained profits as a source of funds?

• A)Control of the company is not affected.
• B)Capital structure is unaffected.
• C)The company is not committed to paying higher dividends in the future.
• D)No issue costs are involved.

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Definitions:

Cost-Benefit Constraint

The principle that actions or decisions should only be taken or made if the benefits outweigh the costs.

Conservation Principle

A principle in physics stating that certain properties such as mass, energy, or charge in an isolated system remain constant over time.

Perpetual Inventory System

An inventory accounting system where updates are made continuously to the inventory accounts and cost of goods sold as transactions occur.

FIFO

"First In, First Out," an inventory valuation method where the costs of the oldest inventory items are assigned to the cost of goods sold first.