The Following Information Is Taken from the Balance Sheet and Related

question 14

Multiple Choice

The following information is taken from the balance sheet and related disclosures of Maxwell, Inc.: Which of the following statements is (are) true? (Fr this question, more than one answer may be correct.)

• A) The preferred dividends in arrears amount to $120,000 and should appear as a liability in the corporate balance sheet.
• B) The book value per share of common stock is $35.
• C) The stockholders' equity section of the balance sheet should include a deficit (negative amount in retained earnings) of $700,000.
• D) The company has paid no dividend on its common stock during the past two years.

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Definitions:

Disposable Income

Income remaining after deduction of taxes and social security charges, available to be spent or saved as one wishes.

Consumption Spending

The total money spent by households in an economy on goods and services.

Marginal Propensity

The fraction of an additional unit of income that is spent on consumption rather than being saved.