Which of the Following Statements Concerning External Sources of Financing

question 16

Multiple Choice

Which of the following statements concerning external sources of financing for nonfinancial businesses in the United States are TRUE?

• A)Issuing marketable securities is the primary way that they finance their activities.
• B)Bonds are the least important source of external funds to finance their activities.
• C)Stocks are a relatively unimportant source of finance for their activities.
• D)Selling bonds directly to the American household is a major source of funding for American businesses.

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Definitions:

Required Deduction

A mandatory subtraction from gross income, such as taxes or social security contributions, which lowers taxable income.

Unemployment Tax

A tax imposed by governments on employers based on the wages paid to employees, used to fund unemployment compensation programs.

FICA Tax

A federal tax in the United States, consisting of a Social Security tax and a Medicare tax, deducted from employees' paychecks to fund these programs.

Payroll Information Sheet

A document that contains details about an employee's salary, deductions, and other payroll-related information.