A Legal Entity with Authority to Act and Have Liability

question 329

True/False

A legal entity with authority to act and have liability separate from its owners is called a sole proprietorship.

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Definitions:

Tax-Deductible

A tax-deductible expense is one that can be subtracted from gross income to arrive at taxable income, effectively reducing the overall amount of taxes owed.

Operating Leverage

A measure of how revenue growth translates into growth in operating income, influenced by the proportion of fixed costs in a company's cost structure.

Financial Leverage

Leveraging debt to boost the potential yield of an investment.

Total Leverage

A measure that combines both operating and financial leverage to assess a company's total sensitivity to changes in output levels affecting its earnings before interest and taxes.