Correct!

The answer is: a styptic pencil is most commonly used to stop bleeding if a dog or cat toenail is torn or cut too short.

Styptic pencils contain silver nitrate. Application to the bleeding 'quick' (center of toenail, with nerve and vessels) will often cause stinging and discomfort. There is also a styptic powder, which contains the following ingredients: Ferric Subsulfate, Aluminum Chloride, Diatomite, Bentonite, Copper Sulfate, Ammonium Chloride, Benzocaine. This product contains Benzocaine to help with pain.

NOTE: Do not use styptic powder or pencils on birds with broken blood feathers. These items are caustic to skin (especially delicate bird skin).
First Aid For Bleeding - Birds

Additional Information:

Cutting toenails and use of styptic pencils (scroll to bottom of page), from Washington State University.