If a Given Change in Sales Results in a Larger

question 11

Multiple Choice

If a given change in sales results in a larger relative change in EPS then we can definitely say that the firm has

• A)a degree of financial leverage greater than one.
• B)a degree of operating leverage less than one.
• C)a degree of total leverage less than one.
• D)a degree of financial leverage less than one.
• E)a degree of total leverage greater than one.

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Definitions:

Temporary Accounts

Accounts used to accumulate data related to one accounting period, including revenue, expense, and withdrawal accounts, which are closed at the end of the period.

Trial Balance Columns

Lists in a company's accounting records that show all the debit and credit balances of its accounts, used for internal checking purposes.

General Journal

A ledger where double-entry accounting transactions are initially recorded, including details such as date, accounts affected, and amounts.

General Ledger

A comprehensive set of accounts that records all financial transactions of a business, used to prepare financial statements.