TB MC Qu. 10-139 (Static) Why doesn't stockholders' equity equal the... Why doesn't stockholders' equity equal the market value of equity? Multiple Choice Stockholders' equity usually does equal the market value of equity. It's due to incorrect entries prepared by accountants. Investors tend to incorrectly price the market value of equity. It's related to the use of historical cost to report many long-term assets and the expensing of value-generating costs such as research and development and advertising.

TB MC Qu. 10-139 (Static) Why doesn't stockholders' equity equal the... Why doesn't stockholders' equity equal the market value of equity? Multiple Choice Stockholders' equity usually does equal the market value of equity. It's due to incorrect entries prepared by accountants. Investors tend to incorrectly price the market value of equity. It's related to the use of historical cost to report many long-term assets and the expensing of value-generating costs such as research and development and advertising.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Firm A reports an increase in earnings per share; Firm B reports a decrease in earnings per share. Is this unconditionally informative about each firm’s performance? If not, why is earnings per share so commonly discussed in the financial press? Please, don't copy the answer from the book, explain with your words.
A company accounts for possible bad debts using the allowance method. When an actual bad debt occurs, what effect does it have on the accounting equation? O Decreases asscts and decreases stockholders' equity. O Increases assets and increases stockholders' equity. O Decreases assets and decreases liabilities. O No effect on the accounting equation.
Appropriating retained earnings will Multiple Choice cause an increase in stockholders' equity. cause a decrease in stockholders' equity. have no effect on total stockholders' equity. cause an increase in the dividends payable account.
Which of the following is not a factor in producing earnings forecasts? a) Estimating the level of dividends b) Separation of recurring and nonrecurring components c) Recognizing potential earnings management d) Recognizing potential income smoothing
High interest coverage ratio does not indicate O a. The ability to pay future dividends O b. No other answer is true O c. The ability to pay interest O d. The percentage of operating profit paid as an interest
Substantial doubt exists regarding a client's ability to continue. The client must present its plans to mitigate the effects of the events and conditions. Which item is NOT an acceptable plan? a. Restructure debt to delay due date of Bonds Payable. b. Sell assets used in product production for cash. c. Issue Common Stock at market value. d. Decrease dividend requirements. e. Obtain cash by issuing notes.
1- What are the consequences of poor internal equity? 2- What are the consequences of poor external equity? 3- How can pay grades help prevent internal equity problems?
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Conflicts of interest between stockholders and bondholders are known as: O agency costs. O financial distress costs. O underwriting costs. Odealer costs. Otrustee costs. Click Save and Submit to save and submit. Click Save All Answers to save all answers. TCL Save
Which of the following best describes why the predicted incremental earnings arising from a given decision are not sufficient in and of themselves to determine whether that decision is worthwhile? ... O A. They do not tell how the decision affects the firm's reported profits from an accounting perspective. O B. They are not easily predicted from historical financial statements of a firm and its competitors. O C. They do not show how the firm's earnings are expected to change as the result of a particular decision. O D. These earnings are not actual cash flows.
If the stock market is efficient, why do companies manage their earnings? O To avoid violating debt covenants. O To receive bonuses based on reported earnings. O Because companies do not believe the Efficient Market Hypothesis. O All of the above.
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