a b c or d ip 500-510] When a corporation repurchases its own stock, the repurch

Question

a b c or d

ip 500-510] When a corporation repurchases its own stock, the repurchased shares may be retired" or may treated as 'treasury stock Most of the following are good and true explanations of why a corporation might buy back its own stock. Which is NOT a good explanation for why corporations buy back their own stock? O To have shares available to use to acquire another corporation O To increase the number of sharcholders 0 In attempt to avoid a hostile take-over ® To have shares available for employee compensation, such as stock-option plans Question 2 1 pts ip 492-501] Retained earnings were discussed in the course introductory material and in Chapter 3, and reappear in Chapter 11] Most of the following statements regarding retained earnings are true. Which statement is FALSE and misleading with regard to retained earnings? O The payment of cash dividends increases a farm's retained eanings O Retained earnings consists of the firm's cumulative net income less any dividends declared since the firm's inception If the Board declares a cash dividend to shareholders, the dividend reduces retained earnings. O The Statement of Retained Earnings serves as a "bridge, between the income statemert and the Balance Sheet net income (from the income statement) becomes part of retained earnings in the equity section of the balance sheet o you want to clean it up for a fresh, äke-new esperience? And by the way, welcome backt

Explanation / Answer

Answer 1

b) To increase the number of shareholders

Explanation : Though buyback of stock we reduce its outstanding shares available in the market in order to decrease the number of  shareholders.

Answer 2

a) The payment of cash dividends increases a firm's retained earnings.

Explanation : Reatained earning is nothing but part of net earnings accumulated over the years which are not paid as dividends. Thus if payment of cash dividends is made than balance in retained earnings will decrease

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.