Which of the Following Statements Is FALSE

question 58

Multiple Choice

Which of the following statements is FALSE?

• A)If firms smooth dividends,the firm's dividend choice will contain information regarding management's expectations of future earnings.
• B)Because of the increasing popularity of repurchases,firms cut dividends much more frequently than they increase them.
• C)Announcing a share repurchase today does not necessarily represent a long-term commitment to repurchase shares.
• D)While cutting the dividend is costly for managers in terms of their reputation and the reaction of investors,it is by no means as costly as failing to make debt payments.

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Definitions:

Administrative Expense

Expenses incurred in the process of running a company that are not directly tied to a specific product or service, such as salaries of senior executives.

Responsibility Accounting

A system of accountability in which managers are held responsible for those items of revenue and cost—and only those items—over which they can exert significant control. The managers are held responsible for differences between budgeted and actual results.

Significant Variances

Discrepancies between planned and actual figures that are large enough to warrant attention and possibly corrective action by management.

Cost Control

A process of managing and monitoring expenses to keep business operations within a budget.