Leverage Ratios Indicate the Extent to Which ________ Has Been

question 262

Multiple Choice

Leverage ratios indicate the extent to which ________ has been used to fund a business's operations.

• A) debt
• B) equity
• C) owner invested capital
• D) profit

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Definitions:

Absorption Costing

In this accounting method, the complete cost of manufacturing a product, taking into account direct materials, direct labor, along with variable and fixed overheads, is included in the product's price.

Variable Costing

An accounting method that includes only variable production costs (direct materials, direct labor, and variable manufacturing overhead) in product cost calculations, excluding fixed overhead.

Unit Product Cost

The total cost (both fixed and variable) to produce a unit of product, often used in pricing and decision-making processes.

Absorption Costing

A product costing approach within accounting that captures the entirety of manufacturing costs—direct materials, direct labor, and overheads, whether they are variable or fixed.