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Answer to Question #11711 in Other Management for John

Question #11711
3. Which of the following statements is CORRECT?
a. Dividends paid reduce the net income that is reported on a company’s income statement.
b. If a company uses some of its bank deposits to buy short-term, highly liquid marketable securities, this will cause a decline in its current assets as shown on the balance sheet.
c. If a company issues new long-term bonds during the current year, this will increase its reported current liabilities at the end of the year.
d. Accounts receivable are reported as a current liability on the balance sheet.
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.
Expert's answer
Answer:
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
If company pays dividends, then great
payments of dividends lead to decline a level of retained earnings. So 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

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