Which of the Following Decreases Owners' Equity

question 10

Multiple Choice

Which of the following decreases owners' equity?

• A) Additional investments in the company are made by the owners
• B) Operations generate a loss
• C) Operations generate a profit that is retained in the company
• D) None of these decreases owners' equity

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Definitions:

Effective Tax Rate

The average percentage of one's total income paid in taxes, factoring in all deductions and credits.

Capital Structure

The mix of a company's debt, equity, and other sources of financing used to fund its operations and growth.

Cost of Capital

The minimum return that a business needs to generate on its projects to preserve its marketplace value and draw in financing.

Flotation Costs

Expenses incurred by a company in issuing new stocks or bonds, including underwriting, legal, and registration fees.