It is usually easier for a C corporation to obtain debt hnancing compared to businesses organized in alternative legal forms because: aC corporation can issue stock OaC corporation has a board of advisors who act as fiduciaries for the corporation's lenders O due to securities regulations, tax concerns, and their own legal form of business organization, many investors can or will invest only in C corporations. O lenders get to choose to whom they want to make a loan and, as a result, business credit is often reserved for larger, more sophisticated businesses that have a formal legal structure in place, like a corporation

It is usually easier for a C corporation to obtain debt hnancing compared to businesses organized in alternative legal forms because: aC corporation can issue stock OaC corporation has a board of advisors who act as fiduciaries for the corporation's lenders O due to securities regulations, tax concerns, and their own legal form of business organization, many investors can or will invest only in C corporations. O lenders get to choose to whom they want to make a loan and, as a result, business credit is often reserved for larger, more sophisticated businesses that have a formal legal structure in place, like a corporation

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter6: Accounting Quality

Section: Chapter Questions

Problem 5QE: Assume that a corporation needs to enter the private debt market to raise funds for plant expansion....

See similar textbooks

Similar questions

8- which of the following can be described as involving indirect finance? Please select one; a) A Corporation buys commercial paper issued by another corporation b) A Corporation buys commercial paper in a secondary market c) A Corporation takes out loans from a bank d) all of the above e) only a and b of the above
Which of the following is not a description of a classification of a financial institution? An entity that accept money from public and use such to financial instruments issued by businesses or government. An office that collect taxes from registered individuals. An associations whose members are supposed to have a common bond. A company that offers a variety of savings and loan products.
Why would a creditor of a corporation consider suing shareholders of that corporation for a debt owed by the corporation to the creditor?A. The corporation has gone out of business.B. The debt is for a lot of money.C. The shareholder is usually liable for the corporation’s debts.D. The creditor had a contract with the corporation.
9. The choice of the proper mixture of debt and equity, used to finance a corporation, is also referred to as the A. capital budgeting decision.B. capital structure decision.C. investment decision.D. liquidity decision. 10. As a legal entity, a corporation can perform the following functions EXCEPT: A. voteB. borrow money, lend money, sue and be sued, and vote.C. borrow money and lend money.D. borrow money, lend money, and sue and be sued. 12. A firm's investment decision is also called its A. liquidity decision.B. financing decision.C. leasing decision.D. capital budgeting decision. 13. A corporation, potentially, has infinite life because it A. has the same ownership and management.B. is a legal entity.C. is closely regulated.D. has limited liability.
Assume that a corporation needs to enter the private debt market to raise funds for plant expansion. The corporation expects debt covenants to place restrictions on the levels of its current ratio and total-liabilities-to-assets ratio. Considering the accounts that comprise these ratios, give examples of accounting estimates, accounting judgments, and structured transactions that the lender should examine closely.
An advantage of a corporation is that A-They have little government regulation. B-Owners have complete control and don't answer to shareholders. C-Owners have limited liability for debt. D-Owners pay fewer taxes than other businesses.
Which of the following statements is CORRECT? One drawback of forming a corporation is that it generally subjects the firm to additional regulations. One disadvantage of forming a corporation is that it is more difficult for the firm's investors to transfer their ownership interests. One drawback of forming a corporation is that it makes it more difficult for the firm to raise capital. One advantage of forming a corporation is that it subjects the firm's investors to fewer taxes. One drawback of forming a corporation is that it subjects the firm's investors to increased personal liabilities.
What is bought and sold in the equities market? What’s the difference between an LLC and a standard limited liability corporation (aka, a “C” corporation in IRS parlance)? Explain what is meant by “the corporate veil” and “piercing the corporate veil”? What is an insurance reserve AND is it an asset or a liability on the insurer’s financial statements? What’s the difference between a profit statement and a net worth statement? How does an insurer make a profit in each of these three categories? Underwriting Profit Investment Profit Operations Profit Explain why the twin financial mandates of solvency and profitability create a conflict for an insurer.
Secondary Intermediaries are called as such because they depend heavily on other financial intermediaries like commercial banks to loanable funds. Included in this category are finance companies, mortgage banks, and real estate investment trusts. It is true or false?
Forming a limited liability company is one of the best ways to protect personal finances from business debts and obligations. Which of the following describes another advantage of forming an LLC? a) LLCs aren't recognized as legal entities by the government. b) LLCs allow business owners to be tax exempt. c) LLCs offer more flexibility when compared to corporations. d) LLCs pay taxes to the IRS directly, which makes filing
Which of the following statements is false concerning forms of businessorganization? a. A corporation has tax advantages over the other forms of businessorganization.b. It is easier for a corporation to raise large sums of money than it isfor a sole proprietorship or partnership.C. A sole proprietorship is an easy type of business to form.d. Owners Of sole proprietorships and partnerships have personalliability for the debts of the business while owners of corporationshave limited legal liability.
Which of the following statements is true about different types of firms? O Corporations do not have limited liability O Owners of a corporation are liable for any obligations it enters into O Partnerships are the most common type of business firms in the world O A limited liability company is like a corporation because its owners are not personally liable for the firm's debts