Which of the Following Applies to the Clean Surplus Theory

Multiple Choice

Which of the following applies to the clean surplus theory?

A) It is a theory that is applied to security valuation, but is not very attuned to accounting concepts and numbers.
B) The theory values a firm's equity based on the beginning of the period book value plus the present value of expected future abnormal earnings.
C) The theory considers a firm's abnormal earnings amount to be equal to its beginning of the period book value multiplied by the cost of equity capital.
D) This theory does not tie in well with the FASB's concept of comprehensive income.