Which of the Following Statements Is False

question 38

Multiple Choice

Which of the following statements is false?

• A)Creditors do not have voting power.
• B)Payment on interest on debt in considered an expense, while payment of dividends is a return on capital.
• C)Unpaid debt is a liability of the firm, and if not paid, can result in liquidation of the firm.Unpaid common stock dividends cannot force liquidation.
• D)One of the costs of issuing equity is the possibility of financial distress, while no financial distress is associated with debt.
• E)None of the above.

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Definitions:

Efficient Output

The level of production where the maximum possible output is achieved with the given resources and technology, minimizing waste and cost.

Firm

A business organization, such as a corporation, partnership, or sole proprietorship, that sells goods or services in exchange for money.

Firm's ATC

The total average cost for a firm, including both fixed and variable costs, per unit of output.

Total Profit

The overall financial gain made in a business transaction or operation, calculated as the revenue minus the costs of achieving that revenue.