Which of the Statements Below Is FALSE

question 64

Multiple Choice

Which of the statements below is FALSE?

• A)The payment of cash dividends to shareholders is a deductible expense for the company.
• B)Unlike coupon payments on bonds,which are treated as an interest expense of the firm,common stock dividends are considered a return of capital to shareholders and not an expense of the firm.
• C)For the shareholder,receipt of dividends is a taxable event.
• D)A typical practice of many companies is to distribute part of the earnings to shareholders through cash dividends.

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Definitions:

Normal Balance

The side (debit or credit) on which entries increase an account's balance, based on the accounting equation.

Financial Statement

A written record that conveys the financial activities and conditions of a business or individual, typically including the balance sheet, income statement, and cash flow statement.

Permanent/Temporary

This refers to the nature of employment or status of objects wherein 'permanent' indicates indefinite duration and 'temporary' indicates a fixed duration.

Normal Balance

Normal Balance is the side (debit or credit) where increases to the account are recorded, depending on the account type.