GK
ACCOUNTING
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
Risk principle
|
|
|
Cost principle
|
|
|
Control principle
|
|
|
All of these
|
Detailed explanation-1: -Main concern of this principle is to earn maximum Earnings per share with minimum cost of financing. Interest rates and tax rates controls cost of financing. Debt capital is cheaper.
Detailed explanation-2: -The nature of earnings is the guiding principles in determining the capital structure. Nature of earning may be long term or short term, may be in the nature of interest or in the nature of dividend. Was this answer helpful?
Detailed explanation-3: -1. The term “capital structure” refers to: long-term debt, preferred stock, and common stock equity.
Detailed explanation-4: -One may use it to finance overall business operations and investment activities. The types of capital structure are equity share capital, debt, preference share capital, and vendor finance.