The long-term liability for deferred income taxes arises because: some book income will never be subject to income tax. some expenses are deducted for tax purposes before they are deducted for book purposes. income tax rates change from year to year. the company has not paid income taxes currently due. The payment of a current liability will: decrease the net income. decrease workign capital increase workign capital not affect workign capital. If a firm sells treaury stock for more than its cot: a gain is recognized in the income statement retained earnings is increased. additional paid-in capital is increased.

A higher P/E ratio means that: the stock is more reasonably priced. the stock is realitively expensive. investors are wary of the stock. earnings are expected to decrease For the fiscal year ended March 31, 2009, a company reported earnings per share of $3.25 and cash dividends per share of $0.50. During fiscal 2010, the company had a 3 for 2 stock split. In the annual report for the fiscal year ended March 31, 2010, earnings per share and cash dividends for fiscal 2009 would be reported.