From a Corporation's Point of View, a Disadvantage of Issuing

question 155

Multiple Choice

From a corporation's point of view, a disadvantage of issuing preferred stock is ________.

• A) that it increases financial leverage
• B) that it has to give fixed payments as well as voting rights to the holders
• C) its excellent merger security
• D) that the dividends are not tax-deductible

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Definitions:

Ledger Entries

Records of financial transactions within a company’s general ledger, detailing accounts affected and the amounts for each transaction.

Closing Entries

Journal entries made at the end of an accounting period to transfer the balances of temporary accounts to permanent accounts, thereby preparing the books for the next period.

Adjusted Trial Balance

A list of all the accounts and their balances after adjusting entries are made, used for preparing financial statements.

Revenue Accounts

Accounts used in accounting to record the company's income from its operations or activities.