Which of the Following Statements Is True About Stocks

question 6

Multiple Choice

Which of the following statements is true about stocks?

• A) Owners of stock securities are guaranteed a return on their investment.
• B) Stocks have a maturity date.
• C) Stocks represent a debt to be paid.
• D) Owners of stock securities are actual owners of the firm.
• E) Only institutional investors can own stock securities.

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Definitions:

Direct Write-Off Method

A method of accounting for bad debts that involves charging unpaid customer accounts directly to the income statement when they are determined to be uncollectible.

Accounting Equation

The fundamental equation that ensures the balance of a company's financial records: Assets = Liabilities + Equity.

Uncollectible Accounts

Accounts that are considered to be uncollectable due to the debtor being unlikely to pay, also known as bad debt.

Notes Receivable

This refers to promissory notes that are receivable by a business, representing amounts due from others that they have promised to pay within a specific period.