Which of the Following Statements Is FALSE in Regard to Borrowing

question 85

Multiple Choice

Which of the following statements is FALSE in regard to borrowing money?

• A) Interest expense on a loan may impact prices and profits.
• B) A company with a successful marketing strategy has its own internal source of fund-profits.
• C) Institutions that loan money are usually more willing to take a risk than are investors who buy stock.
• D) The firm may be able to sell stock to its own employees.
• E) None of these is false.

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Definitions:

Gross Margin

The difference between revenue and cost of goods sold, divided by revenue, expressed as a percentage; it measures how efficiently a company uses its resources to make products.

Predetermined Overhead Rate

An estimated rate used to allocate manufacturing overhead costs to individual units of production, based on a selected activity base such as machine hours or labor hours.

Machine-Hours

A unit of measure that represents the operational time of a machine, often used to allocate manufacturing overhead costs to products.

Unused Capacity

The available production or service facility that is not being used or is underutilized.