Policy-Making Criteria on New Products Should Specify All of the Following

question 46

Multiple Choice

Policy-making criteria on new products should specify all of the following except

• A) a working definition of the profit concept acceptable to top management.
• B) an exact level of profits.
• C) the availability and cost of capital to develop a new product.
• D) a specified time period in which the new product must recoup its operating costs and begin contributing to profits.

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Definitions:

Net Income

The total earnings of a company after subtracting all expenses and taxes from total revenue; often referred to as the bottom line.

Revenue and Expense Account Balances

The amounts recorded in accounts tracking the income earned and expenses incurred by a business over a period of time.

Owner's Capital Account

An equity account on the balance sheet representing the owner's investment and retained earnings in the business.

Trial Balance

A bookkeeping report that lists the balances of all ledgers in two columns, debit and credit, ensuring that the total debits equal total credits, which is crucial for the accuracy of financial statements.