If a Firm's Degree of Accounting Operating Leverage Is 1

question 38

True/False

If a firm's degree of accounting operating leverage is 1.12, then a 10 percent increase in revenue should result in a 12.0 percent increase in EBIT.

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Definitions:

Attitude Accessibility

The ease with which an attitude can be remembered or brought to mind.

Cognitive Structure of Belief

The mental framework that organizes and influences one's acceptance of ideas, information, and perceptions, shaping attitudes and convictions.

Tendency for Attitudes

A predisposition or inclination to respond in a particular way toward certain situations, objects, or people, reflecting underlying beliefs or feelings.

Cognitive Dissonance Theory

A psychological theory that suggests that we experience discomfort or dissonance when our beliefs, ideals, or actions are in conflict, leading to an internal drive to reduce the dissonance.