It is usually easier for a C corporation to obtain debt financing compared to businessesorganized in alternative legal forms because:a C corporation can issue stockO a C corporation has a board of advisors who act as fiduciaries for the corporation's lendersO due to securities regulations, tax concerns, and their own legal form of business organization, manyinvestors can or will invest only in C corporations.O lenders get to choose to whom they want to make a loan and, as a result, business credit is oftenreserved for larger, more sophisticated businesses that have a formal legal structure in place, like acorporation

Business Financing -A small firm can obtain financing through a variety of methods. Financial…

Answered: It is usually easier for a C…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Which of the following is the primary element that distinguishes accounting for corporations from accounting for partnerships? a. The corporation draws a sharper distinction in accounting for sources of capital. b. The entity theory relates primarily to the other forms of business organization. c. In a corporation, retained earnings may be reduced only by the declaration of dividends. d. Generally accepted accounting principles apply to corporations but have relatively little applicability to other forms of business organizations.
Select the best term for each definition below. Definitions Terms a. Shareholders can lose no more than the amount they invest in the company. b. Corporate earnings are taxed twice—at the corporate level and individual shareholder level. c. Like an S corporation, but there are no limitations on the number of owners as in an S corporation. d. Traces the line of authority within the corporation. e. Allows for legal treatment as a corporation, but tax treatment as a partnership. f. Has stock traded on a stock exchange such as the New York Stock Exchange (NYSE). g. The first time a corporation issues stock to the public. h. Describes (a) the nature of the firm’s business activities, (b) the shares to be issued, and (c) the composition of the initial board of directors.
Which of the following statements is true? A. the organizational form that is the easies to raise capital is the corporation B. corporations make up the largest proportion of businesses in the U.S C. sole proprietorships are protected by limited liability D. owners of corporations are not protected by limited liability
Which of the following statements is true about different types of firms? O Corporations do not have limited liability O Owners of a corporation are liable for any obligations it enters into O Partnerships are the most common type of business firms in the world O A limited liability company is like a corporation because its owners are not personally liable for the firm's debts
Select all that are true with respect the similarities or differences between debt and equity. Group of answer choices Debt represents an ownership interest in the firm, equity does not. Equity represents an ownership interest in the firm, debt does not. Generally speaking, dividends are tax deductible, interest is not. (US tax laws) Generally speaking, interest is tax deductible, dividends are not. (US tax laws) Debtholders have priority over equity holders in receiving "payments".
Which of the following statements is NOT true? A. Debt contracts tend to impose more restrictions on the actions of the borrower than the lender B. Larger corporations have easier access to the securities market C. The financial sector is one of the least regulated industries in the US economy D. Collateral is used to secure debt contracts
Until the 1970s, almost all investment banking firms were private partnerships, generally with a limited capital base. When underwriting large securities offerings, these partnerships almost always formed underwriting syndicates, in order to meet regulatory capital requirements, distribute the securities, and share risk. Many investment banking firms had “relationships” with corporations. In the 1970s, the investment banking industry began to change to a more “transactional” form, where corporations use different investment bankers for different services, on an as-needed basis. Investment banking firms have grown in size and scope, largely through mergers, and most of the larger firms have converted to publicly traded stock companies. Requirement: Assuming as an Investment Banker a). Discuss why the company needs to raise capital – should they raise debt or equity, and what’s the best way to do it? Shedding light on the several aspects, ALSO DISCUSS why firms go public, mechanism…
Which of the following is a financial investment that represents a loan made to a private business? Becca's Bakery purchases mortgage backed securities. Becca's Bakery gets an investor from the show Shark Tank. Becca's Bakery issues new bonds that they sell to the public. O Becca's Bakery issues stock and sells shares to investors.
Under the corporate form of business organization, Group of answer choices a)ownership rights are easily transferred b)a stockholder is personally liable for the debts of the corporation c)stockholders’ acts can bind the corporation even though the stockholders have not been appointed as agents of the corporation d)stockholders wishing to sell their corporate shares must get the approval of other stockholders
Identify which of the following statements are true for the corporate form of organization. (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.) ? Corporate income that is distributed to shareholders is usually taxed twice. ? Corporations are often subject to fewer regulations than partnerships. ? The sale of shares from one stockholder to another does not impact operations. An exception is when it changes the makeup of directors. ? It has many of the same rights as an individual. ? It does not end with the death of an owner. ?Stockholders are expected to hire and fire key executives. ? The president and vice presidents choose the board of directors.
Which of the following is not correct about special purpose financial statements? O a. This type of statement is usually required by a shareholder O b.A special-purpose financial statement is a financial report that is intended for presentation to a limited group of users O . This type of statement is usually required by a government entity O d. Special-purpose financial statements may or may not be prepared in accordance with a financial reporting framework
1 The most important exemption from the prospectus requirement are the "Accredited Investors" provisions in the Securities Act. Who are defined as Accredited Investors? Multiple Choice Banks and investment dealers. Individuals and their spouses owning net financial assets exceeding $1 million; and individuals who, either alone or with a spouse, have net assets of at least $5 million. Banks, investment dealers and governments. All of these are accredited investors. Governments.

SEE MORE QUESTIONS

Recommended textbooks for you

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

Horngren's Cost Accounting: A Managerial Emphasis…

Accounting

ISBN:

9780134475585

Author:

Srikant M. Datar, Madhav V. Rajan

Publisher:

PEARSON

Intermediate Accounting

Accounting

ISBN:

9781259722660

Author:

J. David Spiceland, Mark W. Nelson, Wayne M Thomas

Publisher:

McGraw-Hill Education

Financial and Managerial Accounting

Accounting

ISBN:

9781259726705

Author:

John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS