Which of the Following Statements Is FALSE

question 30

Multiple Choice

Which of the following statements is FALSE?

• A)Often,the decision to abandon a project entails costs,which may be either positive or negative.
• B)Mortgage interest rates are higher than Treasury rates because mortgages have an abandonment option that Treasuries do not have: You can prepay your mortgage at any time,while the U.S.government can repay its debt only according to the schedule outlined in the bond contract.
• C)A popular option gives holders of the bond the option to convert the bond into equity.These kinds of bonds are termed callable bonds.
• D)More often than not,there is an opportunity cost of abandoning a project: If you shut down the project and later decide to start it up again,you have to pay the costs of restarting the project.

---

Definitions:

Outstanding Check

A check that has been written by a company but has not yet been cashed or cleared by the bank.

Accounting Records

Documents and books that capture a company's financial transactions, including journals, ledgers, and financial statements.

Cash Account

An account where all transactions are made in cash, including receipts and payments.

Bank Reconciliation

Bank reconciliation is the process of matching the balances in an entity's accounting records for a cash account to the corresponding information on a bank statement, to ensure accuracy.