Which One of the Following Statements Concerning Debt Issues Is

question 68

Multiple Choice

Which one of the following statements concerning debt issues is correct?

• A)A prospectus is required for public issues of equity but not for debt.
• B)The only difference between a term loan and a private placement is the size of the issue.
• C)Direct long-term loans must be registered with the SEC.
• D)Firms often pay higher interest rates on term loans than on public issues of debt.
• E)The flotation costs of issuing debt tend to be more expensive than for issuing equity.

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Definitions:

Bank Loan Payable

Bank loan payable is a liability account that reflects the amount of money borrowed from a bank by a company or individual that is yet to be repaid.

Machinery

Consists of the machines and equipment designed to perform specific tasks in industrial, commercial, or agricultural applications.

Accounts Receivable

Amounts owed to a company by customers for goods or services delivered on credit.

Ledger

A comprehensive collection of all accounts used by an organization, summarizing all transactions occurring within an accounting period.