A Company with a Bond Rating of BBB Is More

question 39

Multiple Choice

A company with a bond rating of BBB is more likely to have which of the following qualities compared to a company with a bond rating of B?

• A) greater reliance on equity financing
• B) high variability in past earnings
• C) little use of subordinated debt
• D) small firm size

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Definitions:

Unadjusted Trial Balance

A list of all the general ledger accounts and their balances at a certain point in time before any adjustments are made.

Adjusted Trial Balance

A list of all account balances in the general ledger after adjustments, used to prepare financial statements and ensure the accuracy of the accounts.

Income Statement

The income statement, also known as a profit and loss statement, provides a summary of a company's revenues, costs, and expenses incurred during a specific period, illustrating the company's financial performance.

Statement of Retained Earnings

A financial document that summarizes the changes in retained earnings for a specific period, factoring in net income and dividends paid.