Which of the following is the best reason for the issuance of long-term liabilities?

A) Debt financing offers an income tax advantage.
B) Risk to the firm may be increased.
C) Ownership interest is diluted but may be necessary to do.
D) Debt financing may cost the entity more but is the only available source of funds.

Long-Term Liabilities

Obligations a company owes that are due more than one year in the future, such as bonds payable, long-term loans, and pension obligations.

Debt Financing

Raising capital through the borrowing of funds to be paid back at a later date, typically through loans or by issuing bonds.

Income Tax Advantage

The financial benefit derived from tax laws that allows for deductions, credits, or exclusions, reducing the overall income tax liability.