Capital Structure Refers To

question 119

Multiple Choice

Capital structure refers to:

• A) The amount of inventory held.
• B) The amount of cash on hand.
• C) The mixture of debt and equity.
• D) The accounts receivable policy.
• E) The management of Long-term investments.

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Definitions:

Materiality Constraint

An accounting principle that allows the omission or misstatement of figures that are not significant enough to influence the decision-making process of users of financial statements.

Expense Recognition Principle

An accounting principle that dictates the timing of reporting an expense, aligning it with the revenue it generates to accurately reflect financial performance.

Direct Write-off Method

An accounting method where uncollectable accounts receivable are directly written off against income at the time they are deemed nonrecoverable.

Uncollectible Accounts

Accounts receivable that are considered unlikely to be collected and therefore written off as an expense to the business.