As an Alternative to Selling Shares of Stock as a Means

question 185

Multiple Choice

As an alternative to selling shares of stock as a means of raising funds, a large company could, instead,

• A)invest in physical capital.
• B)use equity finance.
• C)sell bonds.
• D)purchase bonds.

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Definitions:

Selling Expenses

Costs incurred to sell products, including advertising, sales commissions, and promotional materials, that are not directly associated with the production of goods.

Administrative Expenses

Costs related to the general operations of a company, such as salaries of non-production staff, office supplies, and utilities.

Merchandise Inventory

Goods a company holds for the purpose of resale in the normal course of business.

Product Costs

These are costs that are directly associated with the creation of a product, including direct materials, direct labor, and manufacturing overhead.