Optimal Capital Structure "First" Criteria Suggests That Shareholder Control Should

question 24

Multiple Choice

Optimal capital structure "first" criteria suggests that shareholder control should be ________ and that the best way to obtain that is with ________ levels of debt and ________ levels of equity.

• A)high; high; low
• B)low; low,high
• C)low; high; low
• D)high; low; high

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Definitions:

Liability Account

An accounting record that captures the amount of money a firm owes to outsiders, including debts and obligations.

Credit Account Balance

A credit account balance refers to the total amount of credit available in a person's or organization's account, after considering all debits and credits.

Adjusting Entries

Documentation in financial records at the termination of an accounting period to allocate gains and expenses to the correct timeframe.

Trial Balance

A financial spreadsheet where all ledger balances are gathered into columns for debits and credits, ensuring both totals match.