The net income that firm earns can either be paid out to shareholders as __________ or...
The net income that firm earns can either be paid out to shareholders as __________ or can be reinvested in the company as __________. Why are these the correct answers?
Interest; additional paid-in-capital
dividends; retained earnings
shares; capital stocl
capital gains; additional paid-in-capital
interest; retained earnings
Homework Answers
The net income that firm earns can either be paid out to shareholders as Dividends or can be reinvested in the company as retained earnings.
So , the right option is Dividends; retained earnings.
Explanation :- the part of net profit which is paid to shareholders is known as dividend and the other part that is reinvested in the company is known as , retained earnings.
Explanation for rejecting other options :-
Interest is paid to the creditors or for debts of the company.
Additional paid in capital is the value of share capital above its par value.
Capital gains are the profit that arises from sale of capital asset.
So, other options are wrong
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The net income that firm earns can either be paid out to
shareholders as __________ or...
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Accounting for Shareholders’ Equity
Transactions
The shareholders’ equity section of the balance sheet of The
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of operations:
Common stock, $0.1 par value
$600,000
Additional paid-in-capital
89,400,000
Retained earnings
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Treasury stock
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Shareholders’ equity
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Generated net income of $6 million.
Paid a cash dividend of $1.5 million.
Purchased 100,000 shares of common stock at $9.5 per
share....
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Please explain how to get the answers to the missing blanks.
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Transactions
The shareholders’ equity section of the balance sheet of The
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of operations:
Common stock, $0.1 par value
$600,000
Additional paid-in-capital
89,400,000
Retained earnings
32,000,000
Treasury stock
(7,500,000)
Shareholders’ equity
$114,500,000
During the second year of operations, the following transactions
occurred:
Generated net income of $6 million.
Paid a cash dividend of $1.5 million.
Purchased 100,000 shares of common stock at $9.5 per
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