Debt financing is a cheaper source of finance because of A. Time value of Money B. Rate of Interest C. Tax deductibility of Interest D. Dividends not payable to lenders.

Debt financing is a cheaper source of finance because of
A. Time value of Money
B. Rate of Interest
C. Tax deductibility of Interest
D. Dividends not payable to lenders.
by

1 Answer

Answer :

C. Tax deductibility of Interest
by

Related questions

Which of the following statements relating to working capital financing is not correct? A. An aggressive policy uses long-term debt to finance fluctuating current assetsB. Long-term debt is less risky that short-term debt C. A conservative policy uses long-term debt to finance fixed assets D. Short-term debt is cheaper than long-term debt E. The matching principle indicates that fluctuating current assets should be financed by short-term debt

Description : Which of the following statements relating to working capital financing is not correct? A. An aggressive policy uses long-term debt to finance fluctuating current assets B. Long-term debt ... . The matching principle indicates that fluctuating current assets should be  financed by short-term debt

Last Answer : A. An aggressive policy uses long-term debt to finance fluctuating current assets

Interest payments, principal payments, and cash dividends are the typical budgeting cash-flow analysis because they are A. included in; financing B. excluded from; financing C. included in; operating D. excluded from; operating

Description : Interest payments, principal payments, and cash dividends are the typical budgeting cash-flow analysis because they are A. included in; financing B. excluded from; financing C. included in; operating D. excluded from; operating

Last Answer : C. included in; operating

Which of the following statements is correct for a conservative financing policy for a firm relative to a former aggressive policy? A. The firm uses long-term financing to finance all fixed and current assets. B. The firm will see an increase in its expected profits. C. The firm will see an increase in its risk profile. D. The firm will increase its dividends per share (DPS) this period.

Description : Which of the following statements is correct for a conservative financing policy for a firm  relative to a former aggressive policy? A. The firm uses long-term financing to finance all fixed and current ... its risk profile. D. The firm will increase its dividends per share (DPS) this period.

Last Answer : B. The firm will see an increase in its expected profits.

Which of the following is not included in the assumption on which Myron Gorden proposed a model on Stock valuation A. Retained earning the only source of financing B. Finite Life of the firm C. Taxes do not exist D. Constant rate of return on firms investment.

Description : Which of the following is not included in the assumption on which Myron Gorden proposed a model on Stock valuation A. Retained earning the only source of financing B. Finite Life of the firm C. Taxes do not exist D. Constant rate of return on firms investment.

Last Answer : B. Finite Life of the firm

After declaration dividends are paid to the shareholders as per the provision of A. Indian Companies Act B. RBI Act C. SEBI Act D. Indian Contract Act

Description : After declaration dividends are paid to the shareholders as per the provision of A. Indian Companies Act B. RBI Act C. SEBI Act D. Indian Contract Act

Last Answer : C. SEBI Act

Which of the following is not one of the primary concerns in the Finance Department? a. Acquiring the capital needed for company activities. b. Establishing a dividend policy that maximizes the return to shareholders. c. Setting accounts payable and accounts receivable policies. d. Driving the financial structure of the firm, its relationship between debt and equity. e. Deciding promo and sales budget

Description : Which of the following is not one of the primary concerns in the Finance Department? a. Acquiring the capital needed for company activities. b. Establishing a dividend policy that maximizes the ... structure of the firm, its relationship between debt and equity. e. Deciding promo and sales budget

Last Answer : e. Deciding promo and sales budget

Cost of capital is helpful in corporative analysis of various A. Source of Finance B. Source of Services C. Source of material D. Product

Description : Cost of capital is helpful in corporative analysis of various A. Source of Finance B. Source of Services C. Source of material D. Product

Last Answer : A. Source of Finance

The most promising source of saving to finance development is A. the profits of organized sector B. profits of railway C. profits of Government sector D. only the profit of private sector

Description : The most promising source of saving to finance development is A. the profits of organized sector B. profits of railway C. profits of Government sector D. only the profit of private sector

Last Answer : A. the profits of organized sector

Under a conservative financing policy a firm would use long-term financing to finance some of the temporary current assets. What should the firm do when a "dip" in temporary current assets causes total assets to fall below the total long-term financing? A. Use the excess funds to pay down long-term debt. B. Invest the excess long-term financing in marketable securities. C. Use the excess funds to repurchase common stock. D. Purchase additional plant and equipment.

Description : Under a conservative financing policy a firm would use long-term financing to finance some of the temporary current assets. What should the firm do when a "dip" in temporary current assets causes ... C. Use the excess funds to repurchase common stock. D. Purchase additional plant and equipment.

Last Answer : B. Invest the excess long-term financing in marketable securities.

As per AS – 14 purchase consideration is what is payable to A. Shareholders B. Creditors C. Debentureholders D. Shareholders and Debentureholders

Description : As per AS – 14 purchase consideration is what is payable to A. Shareholders B. Creditors C. Debentureholders D. Shareholders and Debentureholders

Last Answer : A. Shareholders

A. Bank overdraft B. Bills Payable C. Account Payable D. Retain earning

Description : A. Bank overdraft B. Bills Payable C. Account Payable D. Retain earning

Last Answer : D. Retain earning

Premium received on issue of shares cannot be utilised for ---------. A. for the issue of bonus shares B. for writing of preliminary expenses C. for providing premium payable on redemption D. for distribution of dividend

Description : Premium received on issue of shares cannot be utilised for ---------. A. for the issue of bonus shares B. for writing of preliminary expenses C. for providing premium payable on redemption D. for distribution of dividend

Last Answer : D. for distribution of dividend

The return on investment (ROI) may be calculated as A. Net profit before interest, tax and dividend / Capital employed B. Net profit after interest, tax and dividend / Shareholder's fund C. ( Net profit - preference dividend )/ No. of equity shares D. Return on Investment / Net profit ratio

Description : The return on investment (ROI) may be calculated as A. Net profit before interest, tax and dividend / Capital employed B. Net profit after interest, tax and dividend / Shareholder's fund C. ( Net profit - preference dividend )/ No. of equity shares D. Return on Investment / Net profit ratio

Last Answer : A. Net profit before interest, tax and dividend / Capital employed

Stock price is a direct function of dividends, EPS, and ______ along with emergency loans? a. debt rating c. book value b. cash on hand d. yield ratio

Description : Stock price is a direct function of dividends, EPS, and ______ along with emergency loans? a. debt rating c. book value b. cash on hand d. yield ratio

Last Answer : c. book value

Which among the following is not the instrument of monetary policy A. Deficit financing B. Statutory liquidity Ratio C. Cash reserve ratio D. Open market operation

Description : Which among the following is not the instrument of monetary policy A. Deficit financing B. Statutory liquidity Ratio C. Cash reserve ratio D. Open market operation

Last Answer : A. Deficit financing

Interest paid by the government on the loans raised is called - (1) Debt Servicing (2) Deficit Financing (3) Discounted Budgeting (4) Bridge-loan

Description : Interest paid by the government on the loans raised is called - (1) Debt Servicing (2) Deficit Financing (3) Discounted Budgeting (4) Bridge-loan

Last Answer : (1) Debt Servicing Explanation: Debt service is the amount of money required to make payments on the principal and interest on outstanding loans, the interest on bonds. or the principal of maturing bonds. An ... or company unable to make such payments is said to be "unable to service one's debt."

Interest paid by the government on the loans raised is called (1) Debt Servicing (2) Deficit Financing (3) Discounted Budgeting (4) Bridge-loan

Description : Interest paid by the government on the loans raised is called (1) Debt Servicing (2) Deficit Financing (3) Discounted Budgeting (4) Bridge-loan 

Last Answer :  Debt Servicing

The idea that irrespective of how a government chooses to increase spending, either by debt financing or tax financing, the outcome will be the same and demand will remain unchanged, is popularly known as: a) Ricardian theory of equivalence b) Ricardian theory of competitive advantage c) Ricardian theory of stability d) None of the above

Description : The idea that irrespective of how a government chooses to increase spending, either by debt financing or tax financing, the outcome will be the same and demand will remain unchanged, is popularly ... b) Ricardian theory of competitive advantage c) Ricardian theory of stability d) None of the above

Last Answer : a) Ricardian theory of equivalence David Ricardo was a British political economist and his most famous theory was that of comparative advantage (along with above theory of Ricardian ... nation should use its resources solely in industries where it has the most international competitiveness

Which of the following statements is most correct? A. For small companies, long-term debt is the principal source of external financing. B. Current assets of the typical manufacturing firm account for over half of its total assets. C. Strict adherence to the maturity matching approach to financing wD. Similar to the capital structure management, working capital management requires the financial manager to make a decision and not address the issue again for several months.ould call for all current assets to be financed solely with current liabilities.

Description : Which of the following statements is most correct? A. For small companies, long-term debt is the principal source of external financing. B. Current assets of the typical manufacturing firm account ... the financial manager to make a decision and not address the issue again for several months.

Last Answer : B. Current assets of the typical manufacturing firm account for over half of its total assets.

A newly established company cannot be successful in obtaining finance by way of A. issue of equity capital B. issue of preference share C. issue of debenture D. None of the above

Description : A newly established company cannot be successful in obtaining finance by way of A. issue of equity capital B. issue of preference share C. issue of debenture D. None of the above

Last Answer : C. issue of debenture

Which combination of the following factors has driven globalisation in the recent past? (i) Growth of multinational corporations (ii) Internationalisation of finance (iii) Increased international trade A. (i) and (ii) B. (i) and (iii) C. (ii) and (iii) D. (i),(ii) and (iii)

Description : Which combination of the following factors has driven globalisation in the recent past? (i) Growth of multinational corporations (ii) Internationalisation of finance (iii) Increased international trade A. (i) and (ii) B. (i) and (iii) C. (ii) and (iii) D. (i),(ii) and (iii)

Last Answer : C. (ii) and (iii)

Which method does not consider the time value of money A. Net present value B. Internal Rate of Return C. Average rate of return D. Profitability Index

Description : Which method does not consider the time value of money A. Net present value B. Internal Rate of Return C. Average rate of return D. Profitability Index

Last Answer : C. Average rate of return

Suppliers and creditors of a firm are interested in A. Profitability position B. Liquidity position C. Market share position D. Debt position

Description : Suppliers and creditors of a firm are interested in A. Profitability position B. Liquidity position C. Market share position D. Debt position

Last Answer : B. Liquidity position

________ is characteristic of liquidity ratios. (a) Organization’s ability to meet its current debt obligations (b) Organization’s use of debt to finance its assets and whether it’s able to meet the interest payments on the debt ;(c) How efficiently the firm is using its assets ;(d) None of given options

Description : ________ is characteristic of liquidity ratios. (a) Organization's ability to meet its current debt obligations (b) Organization's use of debt to finance its assets and whether it's able to meet the interest ... the debt ;(c) How efficiently the firm is using its assets ;(d) None of given options

Last Answer : (a) Organization’s ability to meet its current debt obligations 

From the information given below, calculate Debt service coverage Ratio– Net profit after interest and Tax Rs. 40,000, Depreciation Rs. 5,000, Rate of Income Tax 50%, 10% Mortgage Debentures Rs. 60,000. Fixed Interest Charges Rs. 6,000, Debenture Redemption Fund Appropriation of Outstanding Debentures 10%. (A) 4•06 times (B) 5•06 times (C) 6•06 times (D) 7•06 times

Description : From the information given below, calculate Debt service coverage Ratio- Net profit after interest and Tax Rs. 40,000, Depreciation Rs. 5,000, Rate of Income Tax 50%, 10% Mortgage Debentures Rs. 60,000. Fixed Interest Charges Rs. 6 ... . (A) 4 06 times (B) 5 06 times (C) 6 06 times (D) 7 06 times

Last Answer : Answer: 4•06 times

Your firm has a philosophy that is analogous to the hedging (maturity matching) approach. Which of the following is the most appropriate non-spontaneous form for financing the excess seasonal current asset needs? A. Trade credit. B. 6-month bank notes. C. Accounts payable. D. Common stock equity.

Description : Your firm has a philosophy that is analogous to the hedging (maturity matching) approach. Which of the following is the most appropriate non-spontaneous form for financing the excess seasonal current asset needs? ... credit. B. 6-month bank notes. C. Accounts payable. D. Common stock equity.

Last Answer : B. 6-month bank notes.

Your firm has a philosophy that is analogous to the hedging (maturity matching) approach. Which of the following is the most appropriate form for financing a new capital investme nt in plant and equipment? A. Trade credit. B. 6-month bank notes. C. Accounts payable. D. Common stock equity

Description : Your firm has a philosophy that is analogous to the hedging (maturity matching) approach. Which of the following is the most appropriate form for financing a new capital investme nt in plant and equipment? A. Trade credit. B. 6-month bank notes. C. Accounts payable. D. Common stock  equity

Last Answer : D. Common stock  equity. 

Are there any finance companies that specialize in offering tax debt loans?

Description : Are there any finance companies that specialize in offering tax debt loans?

Last Answer : There is no company that specializes in tax debt loans. Loansstore.com offers tax debt help. They also offer personal loans that could be used to pay off tax debt.

Which of the following does not affect cash flows from a proposal: A. Salvage value B. Depreciation amount C. Tax rate change D. Method of project financing

Description : Which of the following does not affect cash flows from a proposal: A. Salvage value B. Depreciation amount C. Tax rate change D. Method of project financing

Last Answer : D. Method of project financing

Mark the correct option MIS account opened on or after 01 Apr 12 a) The rate of interest shall be 8.5 % per annum payable monthly. b) No withdrawal will be allowed before expiry of maturity period 5 years c) No bonus shall be payable d) All the above

Description : Mark the correct option MIS account opened on or after 01 Apr 12 a) The rate of interest shall be 8.5 % per annum payable monthly. b) No withdrawal will be allowed before expiry of maturity period 5 years c) No bonus shall be payable d) All the above

Last Answer : d) All the above

Which of the following is not a nominal Account? A] Outstanding salaries Account B] Salaries account C] Interest paid D] Commission received

Description : Which of the following is not a nominal Account? A] Outstanding salaries Account B] Salaries account C] Interest paid D] Commission received

Last Answer : A] Outstanding salaries Account

According to which concept, the proprietor pays interest on drawings a) Accrual concept b) Conservatism concept c) Entity concept d) Dual Aspect concept

Description : According to which concept, the proprietor pays interest on drawings a) Accrual concept b) Conservatism concept c) Entity concept d) Dual Aspect concept

Last Answer : c) Entity concept

Under pooling of interest method the difference between the purchase consideration and share capital of the transferee company should be adjusted to: A. General reserve B. Amalgamation adjustment account C. Goodwill or capital reserve D. None of the above

Description : Under pooling of interest method the difference between the purchase consideration and share capital of the transferee company should be adjusted to: A. General reserve B. Amalgamation adjustment account C. Goodwill or capital reserve D. None of the above

Last Answer : A. General reserve

Which is the type of dividend? A. Cash Dividend B. Interest C. Profit cum-reserve D. Flexible Capital

Description : Which is the type of dividend? A. Cash Dividend B. Interest C. Profit cum-reserve D. Flexible Capital

Last Answer : A. Cash Dividend

Indian businesses encounter the following problem in the globalisation A. Infrastructural Bottleneck B. Lack of interest shown by MNC‘s C. Both (A) and (B) D. None of these

Description : Indian businesses encounter the following problem in the globalisation A. Infrastructural Bottleneck B. Lack of interest shown by MNC‘s C. Both (A) and (B) D. None of these

Last Answer : A. Infrastructural Bottleneck

A monopolistic trade practice is deemed to be prejudicial to public interest except when A. Authorized by Central Government B. Authorized by State Government C. Authorized by Supreme Court D. None of the above

Description : A monopolistic trade practice is deemed to be prejudicial to public interest except when A. Authorized by Central Government B. Authorized by State Government C. Authorized by Supreme Court D. None of the above

Last Answer : B. Authorized by State Government

Liberalization means A. Reducing number of reserved industries from 17 to 8 B. Liberating the industry, trade and economy from unwanted restrictions C. Opening up of economy to the world by attaining international competitiveness D. Free determination of interest rates

Description : Liberalization means A. Reducing number of reserved industries from 17 to 8 B. Liberating the industry, trade and economy from unwanted restrictions C. Opening up of economy to the world by attaining international competitiveness D. Free determination of interest rates

Last Answer : B. Liberating the industry, trade and economy from unwanted restrictions

Mark the correct option a) If the certificate is encashed in case of death of the depositor before expiry on of one year from the date of purchase, only the face value of certificate shall be payable b) If certificate is encashed after expiry of one year SB interest will be applicable c) Both A &B d) None of these

Description : Mark the correct option a) If the certificate is encashed in case of death of the depositor before expiry on of  one year from the date of purchase, only the face value of certificate shall be  payable b ... after expiry of one year SB interest will be applicable c) Both A &B d) None of these

Last Answer : d) None of these

Discounted cash flow criteria for investment appraisal does not include A. Not present value B. Benefit cost ratio C. Accounting rate of return D. Internal rate of return

Description : Discounted cash flow criteria for investment appraisal does not include A. Not present value B. Benefit cost ratio C. Accounting rate of return D. Internal rate of return

Last Answer : B. Benefit cost ratio

The salaries and allowances payable to the Members of the Parliament are decided by the – (1) President (2) Cabinet (3) Parliament (4) Finance Commission

Description : The salaries and allowances payable to the Members of the Parliament are decided by the – (1) President (2) Cabinet (3) Parliament (4) Finance Commission

Last Answer : (3) Parliament Explanation: After election to Parliament, the members become entitled to certain amenities. These amenities are provided to members with a view to enable them to function effectively as ... , Allowances and Pension of Members of Parliament Act, 1954 and the rules made there under.

Current liabilities a. are obligations that the company is to pay within the forthcoming year. b. are listed in the balance sheet in order of their expected maturity. c. are listed in the balance sheet, starting with accounts payable. d. should not include long-term debt that is expected to be paid within the next year.

Description : Current liabilities a. are obligations that the company is to pay within the forthcoming year. b. are listed in the balance sheet in order of their expected maturity. c. are listed in the balance sheet, ... . d. should not include long-term debt that is expected to be paid within the next year.

Last Answer : a. are obligations that the company is to pay within the forthcoming year. b. are listed in the balance sheet in order of their expected maturity.

One is entitled to initiate insolvency resolution of a corporate debtor when the corporate debtor __________. a) does not have enough liquid cash to continue operations as a going concern b) has failed to repay a debt when due and payable c) has ceased to be a going concern d) has negative net worth

Description : One is entitled to initiate insolvency resolution of a corporate debtor when the corporate debtor __________. a) does not have enough liquid cash to continue operations as a going concern b) has failed to ... debt when due and payable c) has ceased to be a going concern d) has negative net worth

Last Answer : b) has failed to repay a debt when due and payable

Which of the following is not the main objective of accounting? A] Systematic recording of transactions B] Ascertaining profit or loss C] Ascertainment of financial position D] Solving tax disputes with tax authorities

Description : Which of the following is not the main objective of accounting? A] Systematic recording of transactions B] Ascertaining profit or loss C] Ascertainment of financial position D] Solving tax disputes with tax authorities

Last Answer : D] Solving tax disputes with tax authorities

Accumulated profits include: A. Provision for doubtful debts B. Superannuation fund C. Workmen's compensation fund. D. Provision for Tax

Description : Accumulated profits include: A. Provision for doubtful debts B. Superannuation fund C. Workmen's compensation fund. D. Provision for Tax

Last Answer : C. Workmen's compensation fund.

Which one of the following branches of accounting primarily deals with processing and presenting of accounting data for internal use? A. Financial accounting B. Tax accounting C. Management accounting D. Inflation accounting

Description : Which one of the following branches of accounting primarily deals with processing and presenting of accounting data for internal use? A. Financial accounting B. Tax accounting C. Management accounting D. Inflation accounting

Last Answer : C. Management accounting

Corporate dividend tax is _______ A. Computed on Net profit B. Computed on Share Capital C. Computed on Goss Profit D. Computed on Dividend paid

Description : Corporate dividend tax is _______ A. Computed on Net profit B. Computed on Share Capital C. Computed on Goss Profit D. Computed on Dividend paid

Last Answer : D. Computed on Dividend paid

Provision for Income Tax is _____ A. Debited to P & L Appropriation A/c B. Debited to Profit and Loss A/c C. Debited to Treading A/c D. Credited to P & L Appropriation a/c

Description : Provision for Income Tax is _____ A. Debited to P & L Appropriation A/c B. Debited to Profit and Loss A/c C. Debited to Treading A/c D. Credited to P & L Appropriation a/c

Last Answer : B. Debited to Profit and Loss A/c

Are re-invested stock dividends tax-exempt?

Description : Are re-invested stock dividends tax-exempt?

Last Answer : no. You should have gotten a 1099 from WalMart (or the broker) and the dividends will show up as taxable income.

Personal disposable income is equal to …………………….. (a) Wages and salaries + Dividends paid at home – Personal income tax (b) Wages and salaries + Dividends paid at home + Factor income received from abroad – Personal income tax (c) Wages and salaries + Dividends paid at home + Factor income received from abroad + Transfers from government – Personal income tax. (d) Wages and salaries + Dividends paid at home + Factor income received from abroad - Transfers from government – Personal income tax.

Description : Personal disposable income is equal to .. (a) Wages and salaries + Dividends paid at home - Personal income tax (b) Wages and salaries + Dividends paid at home + Factor income ... + Dividends paid at home + Factor income received from abroad - Transfers from government - Personal income tax.

Last Answer : (c) Wages and salaries + Dividends paid at home + Factor income received from abroad + Transfers from government – Personal income tax.