An Obligation of a Business That Represents the Claims of Others

question 222

Multiple Choice

An obligation of a business that represents the claims of others against the assets of the business is called a(n)

• A) asset
• B) expense
• C) revenue
• D) equity
• E) liability

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Definitions:

WACC

Weighted Average Cost of Capital, the average rate of return a company is expected to pay to all its security holders, including equity and debt.

Calculate

The act of determining a value or amount by mathematical means, often to analyze financial or statistical data.

Borrowed

The act of receiving something, especially money, with the obligation to return it or its equivalent.

Retained Earnings

The portion of a company's profit that is held or retained and saved for future use, investment, or to pay debt, rather than being paid out as dividends to shareholders.