From the Standpoint of the Issuing Company, a Disadvantage of Using

question 51

Multiple Choice

From the standpoint of the issuing company, a disadvantage of using bonds as a means of long-term financing is that

• A) bond interest is deductible for tax purposes.
• B) interest must be paid on a periodic basis regardless of earnings.
• C) income to shareholders may increase as a result of trading on the equity.
• D) the bondholders do not have voting rights.

---

Definitions:

Cash

Physical form of currency, such as coins and banknotes, used to conduct transactions.

Rental Fees

Charges paid for the use of property or equipment, typically on a periodic basis like monthly or annually, under a leasing or rental agreement.

Revenue Account

An account that tracks the income a company generates from its normal business operations.

General Ledger

The General Ledger is the primary accounting record of a company that contains all the accounts needed to prepare financial statements, tracking all transactions.