41. Which of the following statements is CORRECT? a. Dividends paid to sharehold

Question

41. Which of the following statements is CORRECT? a. Dividends paid to shareholders reduce the net income that is reported on a company's b. If a company uses some of its bank deposits to buy short-term, highly liquid marketable c. If a company issues new long-term bonds to purchase fixed assets during the current d. Accounts Receivable are reported as a current liability on the balance sheet. income statement. securities, its Current Assets accounts will decline. year, this will increase its Net Operating Working Capital. e. If a company pays more in dividends than it generates in net income, its retained earnings as reported on the balance sheet will decline from the previous years balance. 42. Hite Industries reported the following: 2017 2016 Net Income $135,000 Retained Earnings$510,000 $445,000 How much in dividends did the firm pay during 2017? a. $77,700 b. $53,200 c. $55,300 d. $60,900 e. $70,000 43. Money markets are markets for a. Consumer automobile loans b. Common stocks c. Long-term bonds d. Short-term debt securities such as Treasury bills and commercial paper e. all of the above 44. Intrinsic value a. equals price in an efficient capital market b. is based on "perceived" future cash flows and "perceived" risk c. can deviate from the firm's fundamentals of revenue generation and costs for an extended period of time d. is not affected by the political climate e. is not affected by the overall economy

Explanation / Answer

41. The answer is option e. If a company pays more in dividends than it generates in net income, its retained earnings as reported on the balance sheet will decline from the previous year’s balance.

42. Dividends= net income- change in retained earnings

                           = $135,000-($510,000-$445,000)

                           = $135,000-$65,000

      Dividends = $70,000

Therefore, the answer is option e.

43. Money money are markets for Short term debt securities such as treasury bills and commercial paper. The answer is Option d.

44. Instrinsic value is based on “perceived” future cash flows and “perceived” risks.

The answer is option b.

I hope that was helpful :)

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