Which of the Following Is Not True Regarding Firms Use

question 151

Multiple Choice

Which of the following is not true regarding firms use of net assets (assets minus liabilities) ?

• A)Firms may choose to use the net assets generated by earnings to repurchase common shares.
• B)Firms may choose to use the net assets generated by earnings to repurchase common shares which result in cash outflows for a firm, similar to paying a cash dividend.
• C)In the case of share repurchases, only those shareholders that choose to sell their shares to the firm receive cash.
• D)Some firms pay periodic dividends to the common shareholders out of net assets.
• E)Firms typically retain some or all of the net assets generated by earnings, causing net assets to decrease, along with retained earnings, which is the component of shareholders' equity showing the cause of that decrease in net assets.

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Definitions:

Nurseries

Facilities or spaces where young plants and trees are cultivated and grown before being transplanted to their final location.

Jane Addams

An American social reformer and pacifist, co-founder of Hull House in Chicago, and leader in women's suffrage and world peace, who was awarded the Nobel Peace Prize in 1931.

Female Suffrage

The right of women to vote in elections; a significant issue in the women's rights movement.

Humanizing Impact

The effect of making something more humane or considerate towards human welfare and dignity.