5. Corporations issue convertib le debt for two main reasons. One is the desire to raise equity capital that, assuming conversion, will arise when the original debt is converted. The other is A) that many corporations can obtain debt financing at lower rates. B) the ease with which convertible debt is sold even if the company has a poor credit C) D) rating. that convertible bonds will always sell at a premium. the fact that equity capital has issue costs that convertible debt does not. 6. Which of the following is not a correct statement about sales taxes? Many companies record sales taxes in the sales account. If sales taxes are included in the sales account, the first step to find the amount of sales taxes is to divide sales by 1 plus the sales tax rate. Sales Taxes Payable is classified as a current liability. Sales taxes are an expense of the seller. A) B) C) D) 7. Noncumulative preferred dividends in arrears are paid to preferred stockholders if sufficient funds remain after payment of the current preferred dividend. are not paid or disclosed. must be paid before any other cash dividends can be distributed. are disclosed as a liability until paid. A) B) C) D)