Which of the Following Statements Is CORRECT

question 31

Multiple Choice

Which of the following statements is CORRECT?

• A) 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.
• B) dividends paid reduce the net income that is reported on a company's income statement.
• C) 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.
• D) 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.
• E) accounts receivable are reported as a current liability on the balance sheet.

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Definitions:

Bad Faith Breach

A situation where a contractual obligation is not fulfilled, with the violator having no intention to honor the contract from the start.

Homeowner's Policy

An insurance policy providing coverage for a private residence, protecting against various risks like damage, theft, and liability.

Compensatory Damages

Financial compensation awarded to a plaintiff to compensate for losses or injuries as a result of the defendant's actions.

Surety

A person who promises to perform the same obligation as another person (the principal) and who is jointly liable along with the principal for that obligation’s performance.