In the First Month of Operations, the Total of the Debit

question 29

Multiple Choice

In the first month of operations, the total of the debit entries to the cash account amounted to $1,200 and the total of the credit entries to the cash account amounted to $800. The cash account has a(n)

• A) $800 credit balance.
• B) $1,200 debit balance.
• C) $400 debit balance.
• D) $400 credit balance.

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Definitions:

Debt-Equity Ratio

A ratio assessing the comparative financing from equity and debt for a company’s assets.

Cost of Equity

The return a company theoretically pays to its equity investors, conceived as a compensation for taking on the risk of investing.

Break-Even Point

The point at which total revenues equal total expenses, and the business neither makes a profit nor incurs a loss.

Capital Structure

The composition of a company’s liabilities and equity, detailing how it finances its overall operations and growth.