For a Corporation Such as AT&T, What Are the Two

question 114

Multiple Choice

For a corporation such as AT&T, what are the two primary advantages of equity financing?

• A) It never has to be paid back and flotation costs are low.
• B) There is no obligation to pay dividends or to repay the money obtained from the sale of stock.
• C) Interest payments are less than debt financing and principal does not have to be repaid.
• D) Ownership is spread among many individuals and no interest payments are required.
• E) Investors pay top dollar for stock issues and the corporation has higher ongoing expenses.

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Definitions:

Revising Depreciation Estimates

Adjusting the period or method used for depreciating a fixed asset due to changes in its expected useful life or salvage value.

Past Periods

Previous time frames or accounting periods, which have already concluded and for which financial statements are typically finalized.

Accelerated Depreciation Method

A depreciation method that provides for a higher depreciation amount in the first year of the asset’s use, followed by a gradually declining amount of depreciation.

Units-Of-Output

A depreciation method that allocates the cost of an asset based on its usage or output during the period.