Debt Management Ratios Show the Extent to Which a Firm's

question 9

True/False

Debt management ratios show the extent to which a firm's managers are attempting to magnify returns on owners' capital through the use of financial leverage.

---

Definitions:

Closing Entry

An accounting entry made at the end of an accounting period to transfer balances from temporary accounts to permanent accounts.

Income Summary

An account used in the closing process that summarizes revenues and expenses for a period, transferring the net income or loss to the owner's equity.

Revenue

The aggregate financial gain acquired by a company from its essential sales activities involving goods or services.

Credit Normal Balance

The usual balance side for credit accounts, typically seen in liabilities, equity, and revenue accounts.