Which of the Following Organizations Would Be Most Likely to Acquire

question 88

Multiple Choice

Which of the following organizations would be most likely to acquire short-term funding by issuing commercial paper?

• A) A well-known, financially stable corporation
• B) A small business that is unable to qualify for loans from commercial banks
• C) A firm with a significant percentage of current assets held as accounts receivable
• D) A company that prefers equity financing to obtain short-term funds

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Definitions:

Equity Method

An accounting technique used by a company to record its investment in another company when it has significant influence but does not have full control or majority ownership.

Income Tax Allocation

Refers to the process of assigning income tax expense or benefit to various components of an organization's financial statements.

Balance Sheet

A financial statement that shows a company's financial position at a specific point in time, detailing assets, liabilities, and shareholders' equity.

Cost Method

An accounting approach used for investments, where the investment is recorded at its original purchase cost without considering changes in its market value.