Which of the Following Is Correct

question 67

Multiple Choice

Which of the following is correct?

• A)Capital structure affects both financial leverage and operating leverage.
• B)Cost structure affects both financial leverage and operating leverage.
• C)Capital structure affects financial leverage and cost structure affects operating leverage.
• D)Capital structure affects operating leverage and cost structure affects financial leverage.
• E)None of the above is correct.

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Definitions:

Gross Price Method

An accounting practice where inventory and purchases are recorded at their full cost without deducting trade discounts.

Catalog Price

The listed price of items for sale as published in a catalog, not accounting for any discounts or promotions that might apply.

Credit Terms

Conditions under which credit is extended by a lender to a borrower, including repayment timeline, interest rate, and any other charges.

Manufacturing Company

A business that produces goods through the processing of raw materials into finished products on a large scale.