A Company May Invest in Debt or Equity Securities of Other

question 70

Multiple Choice

A company may invest in debt or equity securities of other companies to ________.

• A)further enhance a business relationship with a key vendor
• B)invest borrowed money in an effort to improve the company's net income
• C)to weaken the investing company's supply chain source
• D)to allow the company to use investment income to increase its annual dividend

---

Definitions:

State Sales Tax

A tax imposed by state governments on the sale of goods and services, which varies by state and is collected by businesses at the point of sale.

Sales Tax Payable

A liability account in the general ledger that stores the amount of sales tax collected from customers, which is owed to the government.

FOB Shipping Point

A term used in shipping agreements indicating that the buyer takes ownership and responsibility for goods once they are shipped, and is responsible for freight costs and risks.

Accounts Receivable

Outstanding balances due to a company from its clients for products or services rendered but still unpaid.