The correct statement is: "Interest on bonds is tax deductible."

Here's why:

1. Interest on bonds is tax deductible: This is true. Companies can deduct the interest paid on bonds as an expense, which reduces their taxable income.

2. Interest on bonds is not tax deductible: This is false. As explained above, companies can deduct the interest paid on bonds.

3. Distributions to owners are tax deductible: This is false. Distributions to owners, such as dividends, are not tax deductible. They are paid out of after-tax profits.

4. Bonds do not have to be repaid: This is false. When a company issues a bond, it is essentially borrowing money that it agrees to repay at a certain date, known as the maturity date.

5. Bonds always increase return on equity: This is false. While issuing bonds can increase return on equity if the company is able to earn a higher return on the borrowed money than the interest rate it pays, it's not always the case. If the company is not able to earn a higher return, then issuing bonds could actually decrease return on equity.

Question

The correct statement is: "Interest on bonds is tax deductible."

Here's why:

1. Interest on bonds is tax deductible: This is true. Companies can deduct the interest paid on bonds as an expense, which reduces their taxable income.

2. Interest on bonds is not tax deductible: This is false. As explained above, companies can deduct the interest paid on bonds.

3. Distributions to owners are tax deductible: This is false. Distributions to owners, such as dividends, are not tax deductible. They are paid out of after-tax profits.

4. Bonds do not have to be repaid: This is false. When a company issues a bond, it is essentially borrowing money that it agrees to repay at a certain date, known as the maturity date.

5. Bonds always increase return on equity: This is false. While issuing bonds can increase return on equity if the company is able to earn a higher return on the borrowed money than the interest rate it pays, it's not always the case. If the company is not able to earn a higher return, then issuing bonds could actually decrease return on equity.

Knowee AI · Accepted Answer

The correct statement is: "Interest on bonds is tax deductible."

Here's why:

1. Interest on bonds is tax deductible: This is true. Companies can deduct the interest paid on bonds as an expense, which reduces their taxable income.

2. Interest on bonds is not tax deductible: This is false. As explained above, companies can deduct the interest paid on bonds.

3. Distributions to owners are tax deductible: This is false. Distributions to owners, such as dividends, are not tax deductible. They are paid out of after-tax profits.

4. Bonds do not have to be repaid: This is false. When a company issues a bond, it is essentially borrowing money that it agrees to repay at a certain date, known as the maturity date.

5. Bonds always increase return on equity: This is false. While issuing bonds can increase return on equity if the company is able to earn a higher return on the borrowed money than the interest rate it pays, it's not always the case. If the company is not able to earn a higher return, then issuing bonds could actually decrease return on equity.

Which of the following statements is true?Multiple ChoiceInterest on bonds is tax deductible.Interest on bonds is not tax deductible.Distributions to owners are tax deductible.Bonds do not have to be repaid.Bonds always increase return on equity.

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