In Which of the Following Examples Does the Firm Acquire

question 194

Multiple Choice

In which of the following examples does the firm acquire financial capital from households through a financial intermediary?

• A) A firm sells a bond to John Doe.
• B) The firm sells a bond to an employee pension fund.
• C) The firm uses retained earnings to purchase shares of its stocks owned by individuals.
• D) The firm uses retained earnings to purchase shares of its stock owned by a mutual fund company.

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Definitions:

Overhead Cost

Expenses associated with the operation of a business that are not directly tied to a specific product or service.

First Stage Allocations

The initial process of allocating overhead costs to various cost pools before they are assigned to individual products or services.

Processing Activity

The series of actions or operations conducted to modify, handle, or prepare materials or data.

Activity-Based Costing

An accounting method that assigns overhead and indirect costs to specific activities, providing more accurate product costing.