Use the Following Information Regarding Larson Company to Answer the Question

question 84

Multiple Choice

Use the following information regarding Larson Company to answer the question below.
1) Established a petty cash fund in the amount of $250.
2) Reimbursed the petty cash fund given the following petty cash fund disbursements:
A.Payment for postage,$20.
B.Payment for supplies,$70.
3) Increased the petty cash fund to $300.
4) Cash over at the end of the first period was $5.
-The entry to establish the petty cash fund would include a

• A)debit to the Cash account for $250.
• B)debit to the Petty Cash account for $250.
• C)memorandum entry only in the ledger.
• D)credit to the Petty Cash account for $250.

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Definitions:

Personal Taxes

Taxes levied on individuals' income, capital gains, and other forms of personal wealth.

Operating Leverage

The extent to which fixed costs are used in a firm’s operations. If a high percentage of a firm’s total costs are fixed costs, then the firm is said to have a high degree of operating leverage. Operating leverage is a measure of one element of business risk, but does not include the second major element, sales variability.

EPS

Earnings Per Share, a key financial indicator used to measure a company's profitability on a per-share basis, reflecting the portion of a company's profit allocated to each outstanding share of common stock.

MM Model

The Modigliani and Miller theory, which proposes that under certain conditions, the value of a firm is unaffected by its capital structure.