Which of the Following Statements Is Correct,regarding the Voluntary Disclosure

question 10

Multiple Choice

Which of the following statements is correct,regarding the voluntary disclosure of information provided by a firm?

• A) Firms with more informative disclosure policies have a larger number of analysts following them, and more accurate analyst earnings forecasts.
• B) Firms with more informative disclosure policies have a lower number of analysts following them, and less accurate analyst earnings forecasts.
• C) Increased voluntary disclosure within the annual report is associated with higher costs of equity capital.
• D) There is no relationship between increased voluntary disclosures within the annual report and costs of equity capital.

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Definitions:

GAAP

Generally Accepted Accounting Principles; a collection of standardized guidelines and practices for financial accounting.

Income Summary

An account in the closing process that summarizes revenues and expenses for a period, transferring the net result to owner's equity.

Retained Earnings

The portion of a company's profits not distributed as dividends but reinvested in the business or kept as reserve.

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term obligations or those due within one year, calculated by dividing current assets by current liabilities.