Match the Terms with the Definitions

question 45

Multiple Choice

Match the terms with the definitions.
-It is a measure of the extent of overall leverage or proportion of borrowed capital with which a business operates.

• A)profitability measures
• B)operating income ratio
• C)cost of goods sold ratio
• D)ratio of liabilities to stockholders' equity
• E)return on total assets
• F)ratio of net sales to assets
• G)horizontal analysis
• H)leverage
• I)net income ratio
• J)liquidity
• K)liquidity measures
• L)merchandise inventory turnover

Understand the effects of stock issuance and repurchase on a company’s assets, liabilities, and equity.

Recognize the accounting for stock dividends and stock splits.

Understand the concept of earnings per share and how it is calculated.

Distinguish between authorized, issued, and outstanding shares of stock.

---

Definitions:

Depreciation Basis

The initial cost of an asset that is used to calculate depreciation expense over the asset's useful life.

Decedent's Basis

The value assigned to a deceased person's property for tax purposes, determining the basis for heirs or beneficiaries for capital gains tax calculations when they sell the property.

Ordinary Expense

Regular and necessary costs incurred in running a business that are tax-deductible.

Taxpayer's Business

Refers to any enterprise or activity undertaken by an individual with the intention of earning profit.