An Acquisition Is a Transaction in Which a Firm Buys

question 37

True/False

An acquisition is a transaction in which a firm buys another firm with the intention of creating value by buying and selling the acquired firm's assets in the external markets.

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Definitions:

Retained Earnings

The portion of net income that is not distributed to shareholders as dividends but retained by the company for reinvestment.

Total Assets

The sum of all currently owned resources that have value which can be converted into cash and are used in operating the company.

Liabilities

Financial obligations or debts a company owes to others, expected to be settled over time through the transfer of assets, provision of services, or other economic benefits.

Statement of Stockholders' Equity

Financial documentation that shows changes in the value of a company's equity over a reporting period.