The Two Major Advantages of Getting a Loan Versus Investment

question 16

Multiple Choice

The two major advantages of getting a loan versus investment capital are ________.

• A) the money doesn't have to be paid back and lenders typically take an active interest in their borrowers
• B) banks are reliable sources of funding for startups and interest payments are tax deductible
• C) the money doesn't have to be paid back and no ownership in the firm is surrendered
• D) no ownership in the firm is surrendered and interest payments are tax deductible
• E) banks are reliable sources of funding for startups and lenders typically take an active interest in borrowers

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Definitions:

Retail Inventory Method

An accounting method used by retailers to estimate inventory cost by relating the cost of goods sold to retail sales.

Net Sales

The amount of revenue a company generates from its sales activities after deducting any returns, allowances, and discounts.

Beginning Inventory

The value of a business's inventory at the start of an accounting period.

Lower-of-Cost-or-Market

An accounting principle that values inventory at the lower of its historical cost or market value.