Which of the Following Statements Is False Regarding Providers of Financing

question 46

Multiple Choice

Which of the following statements is false regarding providers of financing?

• A) There is less pressure to provide accounting information in those countries in which financing is primarily by banks.
• B) In countries where capital stock is the primary source of financing, accounting emphasizes the income statement.
• C) Disclosures are less extensive in those countries financed primarily by stock.
• D) Bankers tend to focus more on solvency and stockholders focus more on profitability.
• E) As companies become more dependent on financing by stock, more information is demanded.

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Definitions:

Break Even

The point at which total costs and total revenue are equal, resulting in no net loss or gain for a business.

Variable Costs

Costs that vary directly with the level of production or output, such as materials and labor costs.

Economic Profit

Economic profit is the difference between total revenue and total costs, including both explicit and implicit costs, measuring the profit that exceeds the next best alternative use of resources.

Short Run

A period in economics during which at least one input is fixed and cannot be changed, limiting the ability of a firm to adjust to market changes.