Which of the following statements about the use of financial statements is not correct?
A)When choosing between a company that pays steady dividends and one that retains its earnings to support future growth,investors will always choose the company that pays steady dividends.
B)Companies can develop reputations for honest financial reporting even when conveying bad news.
C)Trends in a company's net income from year to year can provide clues about its future earnings,which can help investors to decide whether to buy stock in the company.
D)Information in the notes to the financial statements can influence a user's interpretation of balance sheet and income statement information.

Question

Quizplus · Accepted Answer

The return to investors may be immediate (through dividends)or long-term (through selling stock certificates at a price higher than their original cost).As a result,when choosing between a company that pays steady dividends and one that retains its earnings to support future growth,investors won't always choose the company that pays steady dividends.They might be interested in longer-term returns.

Which of the Following Statements About the Use of Financial