Which of the Following Statements Is False

question 32

Multiple Choice

Which of the following statements is false?

• A) Bond ratings encourage widespread investor participation and relatively liquid markets.
• B) Bonds in the top four categories are often referred to as investment grade bonds.
• C) A bond's rating depends on the risk of bankruptcy as well as the bondholder's ability to lay claim to the firm's assets in the event of a bankruptcy.
• D) Debt issues with a low-priority claim in bankruptcy will have a better rating than issues from the same company that have a higher priority in bankruptcy.

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Definitions:

Unlimited Life

A concept in accounting that assumes a company will continue to operate indefinitely, allowing for the deferral of certain expenses over a long period.

Income Summary

A temporary account used in closing revenue and expense accounts.

Closing Entry

Journal entries made at the end of an accounting period to transfer the balances of temporary accounts to permanent accounts.

Financial Statements

Documents that provide an overview of a company's financial condition, including balance sheet, income statement, and cash flow statement.