The Modigliani and Miller (MM) articles implicitly assumed that bankruptcy did not exist. That led to the development of the "tr
ade-off" model, where the firm's value first rises with the use of debt due to the tax shelter of debt, but later falls as more debt is added because the potential costs of bankruptcy begin to more than offset the tax shelter benefits. Under the trade-off theory, an optimal capital structure exists. A) True
B) False
The trade off theory states that capital structure decisions involve a trade off between costs and benefits of debt financing. Originally MM argued that a firm's capital structure should be 100% debt, but after accounting for bankruptcy costs, then the firm's capital structure should be less than 100% debt. Companies must substitute debt for equity at different levels (or vice versa if needed) until they reach a balance where the firm's value is maximized.
<span>The journal entry to record the initial write-off includes is allowance for doubtful accounts. Allowance for doubtful accounts is a contra account to accounts receivable, and therefore has debit balance. It also needs to be diminished because you already used the bad debt when you make the allowance.</span>
In most cultures, smiling implies friendliness. In the United States, nodding and maintaining consistent eye contact show interest and engagement in a conversation and respect for the speaker. By combining these three nonverbal behaviors, the interviewer is expressing active, positive interest in your interview.
The correct answer is letter "D": One of several products produced from a common input.
Explanation:
Joint products are those manufactured by large companies whose production process is the same at an early stage for all the different products being produced, but at a certain stage, called a split-off, the products begin to have their own characteristics.
Since the products initially come from the same input, the costs are allocated in the bundle. After the split-off, the cost of production is allocated to each type of product.
