Which of the Following Represents a Disadvantage of Issuing Bonds

question 380

Multiple Choice

Which of the following represents a disadvantage of issuing bonds?

• A) Bonds are permanent debt on the firm's balance sheet.
• B) Dividends are legally required.
• C) Bonds increase the firm's debt.
• D) Bondholders receive voting rights.

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Definitions:

Asset Account

An account that represents a resource owned or controlled by a business, expected to provide future economic benefits.

Debit

An entry recorded on the left side of an account in double-entry bookkeeping that increases asset or expense accounts, or decreases liability, equity, or revenue accounts.

Liability Account

An accounting record of obligations or debts that a company owes to others, typically outside of the company.

Increase

An upward adjustment or growth in value, quantity, or size.