1. With its earnings, a firm has a decision to make about whether to pay common dividends or

a. pay depreciation expense on its fixed assets

b. pay preferred dividends

c. pay interest to bondholders

d. reinvest for future growth

2. On the income statement, interest expense is a. after-tax b. tax-deductible preferred dividents are a. tax-deductible b. after-tax and common dividends are a. after-tax b. tax-deductible Wages are considered a(n)

a. an interest expense

b. a depreciation expense

c. a cost of good sold

d. a research and development expense

e. an operating expense

3. A company usually expenses (         ) when it incurs them, because the future benefits that this spending is expected to bring are very uncertain and difficult to time.

a. a depreciation expense

b. an interest expense

c. a cost of goods sold

d. an operating expense

e. a research and development expense