The Use of Fixed Cost Sources of Funds, Such as Debt

question 72

Multiple Choice

The use of fixed cost sources of funds, such as debt and preferred stock, affect a firm's ____.

• A) financial risk
• B) degree of operating leverage
• C) market power
• D) business risk

Grasp the concept of organizational behavior and its impact on business operations.

Understand the significance of a career plan and personal development in a professional setting.

Acknowledge the complexities of ethical dilemmas and decision making in a corporate environment.

Appreciate the role of self-competency in personal and professional growth.

---

Definitions:

Credit

A financial record that raises a liability or equity account, or reduces an asset or expenditure account.

Debit

A debit is an accounting entry that results in either an increase in assets or expenses or a decrease in liabilities or equity on a company's balance sheet.

Owner's Equity

The residual interest in the assets of the entity after deducting liabilities, representing the owner's claim on the business assets.

Expenses

Costs incurred in the process of earning revenue, including operational costs like rent, utilities, and payroll.