The Basic Sources of Capital for a Firm Include All

question 53

Multiple Choice

The basic sources of capital for a firm include all of the following EXCEPT

• A) long-term debt.
• B) common stock.
• C) preferred stock.
• D) current liabilities.

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Definitions:

Executory Costs

These are costs associated with fulfilling the terms of a contract, excluding the direct material and direct labor costs, such as utilities, insurance, and property taxes involved in leasing.

Bargain Purchase Option

A lease provision allowing the lessee to purchase the leased asset at the end of the lease term at a price significantly lower than the expected fair market value.

Minimum Periodic Rental

In leasing agreements, it refers to the lowest amount that the lessee must pay over a specified period.

Capital Lease

A lease agreement that is considered a purchase of an asset for accounting purposes, with the lessee assuming both the benefits and risks of ownership.