When Given a Choice, Businesses Prefer to Obtain Long-Term Financing

question 67

True/False

When given a choice, businesses prefer to obtain long-term financing through retained earnings or by borrowing from a lending institution such as a bank instead of issuing stock.

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Definitions:

Cost System

A method for accumulating and allocating costs to products or services.

Direct Materials

Raw materials directly used in the manufacture of a product and can be easily traced to the finished product.

Variances

Differences between planned or expected financial performance and the actual outcome.

Kilos

A kilo or kilogram is a metric unit of mass equal to 1000 grams, used worldwide for measuring weight.