​ Which of the Following Statements Is NOT CORRECT

question 24

Multiple Choice

​ Which of the following statements is NOT CORRECT?

• A) ​When a corporation's shares are owned by a few individuals and are not traded on public markets, we say that the firm is "closely, or privately, held."
• B) ​"Going public" establishes a firm's true intrinsic value, and it also insures that a highly liquid market will always exist for the firm's shares.
• C) ​When stock in a closely held corporation is offered to the public for the first time, the transaction is called "going public," and the market for such stock is called the new issue market.
• D) ​Publicly owned companies have shares owned by investors who are not associated with management, and public companies must register with and report to a regulatory agency such as the SEC.
• E) ​It is possible for a firm to go public and yet not raise any additional new capital at the time.

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Definitions:

Contra-revenue Account

An account that offsets revenue accounts on the income statement, such as sales returns, allowances, and discounts.

Sales Returns

Goods returned by customers after purchase, leading to a reduction in sales revenue.

Debit Balance

An accounting entry that represents the total amount debited from an account, exceeding the credits made into it.

Sales Discount

A sales discount is a reduction in the price of a product or service offered by a seller to a buyer, usually for early payment or to incentivize purchase.