A difference between debt financing and equity financing is that:
A)debt financing must be repaid,while repayment of equity financing is not required.
B)equity financing must be repaid,while repayment of debt financing is not required.
C)only debt financing can be used to purchase assets.
D)only equity financing can be used to purchase assets.

Question

Quizplus · Accepted Answer

Two sources of financing are available to businesses: equity and debt.Equity refers to financing a business through owners' contributions and reinvestments of profit.Debt refers to financing the business through loans.A business is obligated to repay debt financing,but it is not obligated to repay its equity financing.

A Difference Between Debt Financing and Equity Financing Is That