Which of the Following Statements About the Characteristics of Debt

question 81

Multiple Choice

Which of the following statements about the characteristics of debt and equity are true?

• A) They both can be long-term financial instruments.
• B) They both involve a claim on the issuer's income.
• C) They both enable a corporation to raise funds.
• D) All of the above.
• E) Only A and B of the above.

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Definitions:

Adjusting Entries

The process of making entries in the ledger at the end of the accounting period to allocate profits and expenses to their actual period.

Costs Expire

When a cost is recognized as an expense, typically through depreciation for fixed assets or cost of goods sold for inventory, indicating it has been fully utilized in generating revenue.

Journalized

The process of recording financial transactions in a company's journal, which is the first step in the accounting cycle.

Adjusting Entries

Ledger adjustments made at an accounting period's end to distribute income and spending according to the period they occurred.