Which of the Following Statements Is CORRECT

question 5

Multiple Choice

Which of the following statements is CORRECT?

• A) Retained earnings,as reported on the balance sheet,represent the amount of cash a company has available to pay out as dividends to shareholders.
• B) 50% of the interest received by corporations is excluded from taxable income.
• C) 50% of the dividends received by corporations is excluded from taxable income.
• D) Because taxes on long-term capital gains are not paid until the gain is realized,investors must pay the top individual tax rate on that gain.
• E) The corporate tax system favors equity financing,as dividends paid are deductible from corporate taxes.