Choose the Word or Phrase in [ ] Which Will

question 152

Multiple Choice

Choose the word or phrase in [ ] which will correctly complete the statement. Select
-Lower borrowing costs encourage the substitution of [debt for equity | equity for debt] in corporate capital structures.

• A)for the first item
• B)for the second item
• C)if neither item will correctly complete the statement.

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Definitions:

Interest-Bearing Note

A debt instrument in which the issuer pays the holder interest at a specified rate over the term of the note.

Accrued Interest

Interest that has been incurred but not yet paid or received in cash.

Adjusting Entry

An accounting record made to adjust income or expenditure in accounts to reflect the accrual basis of accounting properly.