Which of the Following Statements Is Not True

question 113

Multiple Choice

Which of the following statements is not true?

• A)When an investor buys stocks and assumes they will increase in value, he or she is using a procedure called buying long.
• B)Selling short is selling stock that has been borrowed from a stockbroker or brokerage firm.
• C)When you sell short, you buy today, knowing that you must sell or cover your short transaction at a later date.
• D)In a short transaction, if the stock increases in value, the investor loses money.
• E)To make money in a short transaction, you must be correct in predicting that a stock will decrease in value.

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Definitions:

Sales Taxes Payable

Liabilities accounted for the sales tax collected from customers on taxable transactions, which are due to be paid to the relevant tax authorities.

Sales Tax Expense

The cost incurred by a seller related to the sales tax charged on goods or services, which is often passed through to the consumer.

Interest Charged

Interest charged is the amount lenders impose on borrowers for the use of borrowed money, often expressed as an annual percentage rate.

Interest Payable

An account representing the amount of interest expense that has been incurred but not yet paid by a company.