Which of the Following Is Not a Consequence of the Double

question 150

Multiple Choice

Which of the following is not a consequence of the double tax on dividends?

• A) Corporations have an incentive to retain earnings and structure distributions to avoid dividend treatment.
• B) Corporations have an incentive to invest in noncorporate rather than corporate businesses.
• C) The cost of capital for corporate investments is increased.
• D) Corporations have an incentive to finance operations with debt rather than equity.
• E) All of the above are consequences of the double tax on dividends.

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Definitions:

Merchandise Inventory

Represents the goods a company has in stock that are available for sale to customers.

Sales on Account

Revenue generated from sales where payment is yet to be collected, often recorded as accounts receivable.

Disbursements Section

A part of cash flow management that records cash outflows or payments made by a business during a specific period.

Cash Budget

A financial plan that estimates cash inflows and outflows over a specific period, helping managers ensure that sufficient cash is available for operations.