Which of the Following Statements Is NOT True

question 10

Multiple Choice

Which of the following statements is NOT true?

• A)Stock repurchases can be used by a firm as part of a plan to change its capital structure.
• B)After a 3-for-1 stock split, a company's price per share should fall, but the number of shares outstanding will rise.
• C)Investors can interpret a stock repurchase program as a signal that the firm's managers believe the stock is undervalued.
• D)Stockholders pay no income tax on dividends if the dividends are used to purchase stock through a dividend reinvestment plan.

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Definitions:

Depreciation Expense

The portion of an asset's initial cost allocated over a specific period as an expense, reflecting its usage and deterioration.

Operating Activities

Activities that relate directly to the business's primary operations, like selling products or services, as opposed to investment or financing activities.

Accounts Receivable

Money owed to a company by its clients or customers for products or services sold on credit.

Depreciation

The systematic allocation of the cost of a tangible asset over its useful life, reflecting the decrease in value due to wear and tear, age, or obsolescence.