Which of the following statements regarding the balance sheet is NOT correct? A) The balance sheet provides a snapshot of the firm’s financial position at a given point in time. B) The balance sheet lists the firm’s assets, liabilities, and equity. C) The balance sheet reports liabilities on the left side. D) The balance sheet […]
As per dividend relevance theory, current dividend payments are believed to reduce investor’s uncertainty, thereby—all else being equal—placing a lower value on a firm’s stock after its payment. Indicate whether the statement is true or false ANSWER FALSE
A dividend reinvestment plan enables stockholders to ________. A) reinvest the dividends in money market instruments which are risk free B) reinvest all dividends in the firm with no accompanying increase in equity C) acquire additional dividends through redemption of stock D) acquire shares at little or no transaction costs ANSWER D
Which is NOT an example of current liabilities? A) Notes payable B) Accounts receivable C) Current portion of long-term debt D) Taxes payable ANSWER B
At the quarterly meeting of Tangshan Mining Corporation, held on September 10th, the directors declared a $1.00 per share dividend for the firm’s 100,000 shares of common stock outstanding. The net effect of declaring and paying this dividend would be to ________. A) decrease total assets by $100,000 and increase stockholders equity by $100,000 B) […]
The bird-in-the-hand argument espousing the importance of dividends or dividend relevance suggests that investors view current dividends as less risky than future dividends or capital gains. Indicate whether the statement is true or false ANSWER TRUE
Stock that is repurchased by the issuing company is called: A) paid in capital. B) retained capital. C) treasury stock. D) par value stock. ANSWER C
Which of the following is a reason for a firm for repurchasing its shares? A) to diminish the shareholder value by increasing the number of shares outstanding and thereby raising earnings per share B) to help encourage a friendly takeover by increasing the number of publicly traded shares C) to make shares available for stock […]
The net effect of a stock repurchase is ________. A) similar to an interest payment B) similar to a cash dividend C) similar to a stock split D) similar to a reverse stock split ANSWER B
Which of the following is the least liquid current asset? A) Accruals B) Accounts receivable C) Marketable securities D) Inventory ANSWER D
