Which of the Following Is NOT One of the Eight

question 2

Multiple Choice

Which of the following is NOT one of the eight basic puzzles about financial structure?

• A)Stocks are the most important source of finance for American businesses.
• B)Issuing marketable securities is not the primary way businesses finance their operations.
• C)Indirect finance,which involves the activities of financial intermediaries,is many times more important than direct finance,in which businesses raise funds directly from lenders in financial markets.
• D)Banks are the most important source of external funds to finance businesses.

Grasp the treatment of preferred shares in consolidation, including cumulative dividends and arrears.

Handle subsequent share purchases and their impact on control and consolidated financial statements.

Calculate the effects of intercompany asset transactions and their adjustments in the consolidation process.

Distinguish between the cost method and equity method of accounting for investments.

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Definitions:

FICA Tax

A federal payroll tax that funds Social Security and Medicare, evenly split between employers and employees.

Medicare

A federal health insurance program in the United States for people aged 65 and older, and for some younger people with disabilities.

Federal Income Tax

A tax by the U.S. federal government on the annual earnings of individuals, corporations, trusts, and other legal entities.

Net Pay

The amount of money an employee receives after all deductions, such as taxes and retirement contributions, are subtracted from their gross pay.