Which Statement Regarding Financial Statements Is True

question 24

Multiple Choice

Which statement regarding financial statements is true?

• A)Dividends paid reduce the net income that is reported on a company's income statement.
• B)If a company uses some of its bank deposits to buy short-term, highly liquid marketable securities, this will cause a decline in its current assets as shown on the balance sheet.
• C)If a company issues new long-term bonds during the current year, this will increase its reported current liabilities at the end of the year.
• D)If a company pays more in dividends than it generates in net income, its retained earnings as reported on the balance sheet will decline from the previous year's balance.

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Definitions:

Call Option

A financial contract that gives the holder the right, but not the obligation, to buy a specified amount of an underlying asset at a set price within a specified time.

Put Option

An agreement in finance that allows the owner to sell a certain quantity of a basic asset at an agreed-upon price before a certain deadline, without being required to do so.

Financial Risk Exposure

represents the potential for financial loss that a company faces due to its financial decisions and market conditions, including changes in interest rates, currency exchange rates, and credit risks.

Citrus Grower

A citrus grower is an individual or company engaged in the cultivation and production of citrus fruits, such as oranges, lemons, limes, and grapefruits.