The Use of Debt Is Sometimes Described as Financial Leverage

question 19

True/False

The use of debt is sometimes described as financial leverage because debt can have the effect of increasing the return on equity.

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Definitions:

Unearned Revenue

Money received by a company for goods or services yet to be provided, recorded as a liability on the balance sheet until earned.

Accounts Receivable

Unpaid amounts due to a company from its clients for delivered or utilized goods or services awaiting payment.

Land

It refers to the earth's surface extending downward to the center and upward to infinity, including permanently attached natural objects, and is considered a non-depreciable asset in accounting.

Journalizing

The process of recording transactions in the journal in chronological order, marking the first step in the accounting cycle.