5)

Which of the following statements is CORRECT?

a. 50% of the interest received by corporations is excluded from taxable income.

b. The corporate tax system favors equity financing, as dividends paid are deductible from corporate taxes.

c. Retained earnings, as reported on the balance sheet, represent the amount of cash a company has available to pay out as dividends to shareholders.

d. Because taxes on long-term capital gains are not paid until the gain is realized, investors must pay the top individual tax rate on that gain.

e. 50% of the dividends received by corporations is excluded from taxable income.

Which of the following statements is CORRECT?

a. The difference between the total assets reported on the balance sheet and the liabilities reported on this statement tells us the current market value of the stockholders' equity, assuming the statements are prepared in accordance with generally accepted accounting principles (GAAP).

b. If a company's statements were prepared in accordance with generally accepted accounting principles (GAAP), the market value of the stock equals the book value of the stock as reported on the balance sheet.

c. The balance sheet for a given year is designed to give us an idea of what happened to the firm during that year.

d. The assets section of a typical company's balance sheet begins with cash, then lists the assets in the order in which they will probably be converted to cash, with the longest-lived assets listed last.

e. The balance sheet for a given year tells us how much money the company earned during that year.