Financial Leverage Is Defined as Benefits That May Result to an Investor

question 17

True/False

Financial leverage is defined as benefits that may result to an investor by borrowing money at a rate of interest that is lower than the expected rate of return on total funds invested in a property.

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Definitions:

Debits

Accounting entries that increase assets or expenses and decrease liabilities, equity, or revenue.

Credits

Entries that increase liabilities, revenues, or equity, or decrease assets or expenses in accounting.

Transferring

The process of moving items, such as data, assets, or inventory, from one location or account to another.

Ledger Accounts

Individual records within the general ledger that show the transactions and balances for each accounting period, relating to specific assets, liabilities, equity, revenues, and expenses.