Which of the Following Statements Is False Regarding the Issuance

question 71

Multiple Choice

Which of the following statements is false regarding the issuance of stock versus bonds to raise capital for a corporation?

• A)The declaration of dividends reduces the amount of the corporation's taxable income.
• B)Interest accrues; whereas, dividends do not accrue.
• C)The payment of bond interest is a contractual requirement.
• D)The payment of dividends is at the discretion of the board of directors.

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Definitions:

Discount Period

The time frame during which a payment can be made at a reduced rate before the full amount becomes due.

Annual Interest

The total amount of interest payable or receivable over one year, depending on whether the context is savings, investment, or a loan.

Credit

An accounting entry that increases liabilities and equity, or decreases an asset or expense account, representing the opposite of a debit.

Sales Discounts

Reductions from the listed or invoice price of goods or services provided to customers, often used as an incentive for early payment.