Which of the Following Statements Is True

question 66

Multiple Choice

Which of the following statements is true?

• A)If a company retains profits instead of paying dividends, the price of their stock is expected to rise.
• B)Investors need not pay taxes on dividend earnings.
• C)Dividend earnings are legally not allowed to be invested and can only be used for consumption.
• D)The annual dividend yield on a stock is always greater than the annual capital-gains yield on the same stock.

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Definitions:

Indirect Method

A method used in cash flow statement preparation that adjusts net income for the changes in balance sheet accounts to calculate the cash from operating activities.

Accounts Payable

Obligations or debts owed by a company to its suppliers or creditors for goods and services received.

Sales

Income earned from the sale of products or services over a defined time frame.

Direct Method

A cost allocation technique used in cost accounting that assigns all service department costs directly to producing departments without considering any services rendered between service departments.