Business Management: Chapter 16 Review

A partner's personal contribution in a business is equity capital.

Retained earnings are a type of equity capital.

Businesses in financial difficulty often have trouble getting debt capital.

Common stock is a type of security, but bonds are not.

Preferred stockholders usually have voting privileges at the stockholders' meetings.

When a corporation ceases operations, preferred and common stockholders usually get all their investment back from the sale of assets.

When starting a business, it is usually desirable to issue only common stock.

Retained earnings are kept in the business in the form of cash only.

Equipment maintenance and insurance are usually included in a leasing agreement.

The original cost of obtaining long-term capital is usually higher than that of short-term capital.