Which of the following statements is FALSE?
A) On the other hand, by relying on short-term debt the firm exposes itself to funding risk, which is the risk of incurring financial distress costs should the firm not be able to refinance its debt in a timely manner or at a reasonable rate.
B) An ultra-conservative policy would involve financing even some of the plant, property, and equipment with short-term sources of funds.
C) With a conservative financing policy, the firm would use short-term debt very sparingly to meet its peak seasonal needs.
D) Short-term debt can have lower agency and lemons costs than long-term debt, and an aggressive financing policy can benefit shareholders.
B
Explanation: B) An ultra-aggressive policy would involve financing even some of the plant, property, and equipment with short-term sources of funds.
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Frank Maple, CPA, represents his brother Joe Maple and Joe's business partner Bill Smith. Joe Maple and Bill Smith are equal shareholders in the Joe & Bill Corporation. The Internal Revenue Service examined the corporation and determined that one of the shareholders committed fraud, but could not determine which shareholder it was. Frank has made an appointment with the Internal Revenue Service to determine which partner was guilty. Which of the following statements reflects what Frank should do in accordance with Circular 230?
A. Frank should meet with the Internal Revenue Service and try to convince the examiner that each shareholder is equally guilty. B. Advise Joe & Bill that they should dissolve the corporation, thereby making it difficult for the Internal Revenue Service to pursue the issue. C. Advise Joe & Bill that he cannot represent them because there is a conflict of interest. D. Advise Joe & Bill on creating documents that will convince the Internal Revenue Service that neither shareholder is guilty of fraud.
If consumption of large quantities of alcoholic beverages over time causes serious health problems a consumer may not recover in tort against the beverage makers because of she assumed the risk
a. True b. False Indicate whether the statement is true or false