The Mix of Capital Components in Use by a Company

question 4

True/False

The mix of capital components in use by a company at a point in time is known as its capital structure. This capital structure is generally described in terms of percentages referring to the relative sizes of the components.

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Definitions:

Merchandising Company

A business that purchases finished goods for resale, making a profit on the merchandise sold.

Income Statement

A financial statement showing the revenue, expenses, and profits or losses of a business over a particular period.

Freight-In

Freight-In costs are the shipping charges for receiving goods from suppliers, considered part of the inventory cost and included in the cost of goods sold when the inventory is sold.

Purchases Account

A ledger account used to record the amounts spent on acquiring inventory for resale or raw materials for production, excluding any direct labor or overhead costs.