A Small Business Should Limit the Amount of Debt It

question 78

True/False

A small business should limit the amount of debt it takes on because debt can add to the firm's risk.

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Definitions:

Residual Value

The estimated value of an asset at the end of its useful life, often considered in depreciation calculations.

Depreciation Expense

The cost allocated to reflect the reduction in value of a tangible asset over its useful life, as part of the wear and tear or obsolescence.

Depreciation

A method of allocating the cost of a physical or tangible asset over its expected usable life to account for decreases in value over time.

Residual Value

The estimated value that an asset will realize upon its sale at the end of its useful life.