Which of the Following Statements Is Correct

question 75

Multiple Choice

Which of the following statements is correct?

• A) Any forecast of financial requirements involves determining how much money the firm will need and is obtained by adding together increases in assets and spontaneous liabilities and subtracting operating income.
• B) The projected balance sheet method of forecasting financial needs requires only a forecast of the firm's balance sheet.Although a forecasted income statement helps clarify the financing needs,it is not essential to the balance sheet method.
• C) Because dividends are paid after taxes from retained earnings,dividends are not included in the projected balance sheet method of forecasting.
• D) The projected balance sheet method forces recognition of the fact that new financing creates additional financial obligations.For instance,new financing can increase expenses which can actually decrease taxes but increase the projected financial need.
• E) Financing feedback describes the effect on the firm's stock price of the announcement that the firm will sell new equity or debt to raise needed capital.

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Definitions:

Incubation Step

A phase in the creative process or problem-solving where ideas are subconsciously pondered, leading to innovative solutions.

Graham Wallas

An academic who developed a conceptual framework for understanding how creativity functions, emphasizing the necessity of a period of unconscious processing in creative thought.

Illumination

The moment in the creative process when a person arrives at an insight or solution after a period of reflection.

Creative Process

A sequence of thought and action steps involved in the generation of new ideas, solutions, or artistic expressions.