Which of the Following Statements Is False

question 60

Multiple Choice

Which of the following statements is false?

• A) The data show a clear preference for equity as a source of external financing for the total population of U.S. firms.
• B) Debt as a fraction of firm value has varied in a range from 30-45% for the average firm.
• C) Capital expenditures greatly exceed firms' external financing, implying that most investment and growth is supported by internally generated funds, such as retained earnings.
• D) Firms in growth industries like biotechnology or high technology carry very little debt, whereas airlines, auto makers, utilities, and financial firms have high leverage ratios.

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Definitions:

Expense Account

An income statement account that represents the cost of goods sold or services provided to generate revenue.

Credit Balance

A credit balance occurs when the total credits in an account exceed the debits, often seen in liability, revenue, and equity accounts.

Capital Account

An account on a company's balance sheet that represents the owners' stake or equity in the company.

Debit Balance

A financial situation where the total sum of debits in an account exceeds the total sum of credits, indicating assets or expenses.