Which of the Following Is Not an Advantage of Issuing

question 23

Multiple Choice

Which of the following is not an advantage of issuing bonds instead of common stock?

• A)Stockholder control is not affected
• B)Earnings per share on common stock may be lower
• C)Tax savings result
• D)Each of these answer choices is an advantage.

---

Definitions:

Absorption Costing

This accounting strategy entails calculating a product's cost by including all costs related to its manufacturing, comprising direct materials, direct labor, and all categories of manufacturing overhead, both variable and fixed.

Variable Costing

A costing method that includes only variable production costs (direct materials, direct labor, and variable overhead) in product costs, excluding fixed overhead.

Net Operating Income

Profit generated from a company’s core business operations, excluding deductions of interest and taxes.

Absorption Costing

This accounting practice involves the comprehensive addition of manufacturing costs—direct materials, direct labor, and both variable and fixed overheads—to the price of a product.