Which of the following is not an accurate statement regarding the distinction between debt and equity?
A)Only equity is considered a source of financing for operations of the business,since debt must be repaid at a specified maturity date.
B)If a business ceases operations and liquidates,claims of all creditors have legal priority over claims of the stockholders.
C)Most debt requires the borrower to pay interest;equity financing does not obligate the company to make a specified payment.
D)The providers of equity are owners of the business;the providers of borrowed funds are creditors.

Question

Quizplus · Accepted Answer

The statement that only equity is considered a source of financing for operations of the business is not accurate. Debt can also be considered a source of financing for operations, but it comes with the requirement to make interest and principal payments.

Which of the Following Is Not an Accurate Statement Regarding