The financing option that creates no liabilities or interest expense is:
A)financing by issuing stock.
B)financing by issuing bonds payable.
C)financing by debt.
D)financing by issuing notes payable.

Question

Quizplus · Accepted Answer

Financing by issuing stock creates no liabilities or interest expense as it involves selling ownership in the company to investors who become shareholders. The company does not have to pay interest on this type of financing or repay any principal amount. However, issuing stock dilutes the ownership of existing shareholders and may lead to loss of control over the company.

The Financing Option That Creates No Liabilities or Interest Expense