The Value of a Business Is Determined by

question 44

Multiple Choice

The value of a business is determined by

• A)what the owner believes the business is worth.
• B)what a valuation formula determines its worth is to the owner.
• C)what a valuation formula determines its worth is to the buyer.
• D)what a buyer with the cash is prepared to pay.

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Definitions:

Sales Tax Payable

A liability account recorded on the balance sheet that represents the amount of sales tax collected from customers and owed to the government.

Estimated Returns Inventory

The provision of goods that are expected to be returned by customers, considered in inventory and financial accounting.

Inventory Shrinkage

The loss of inventory that occurs due to theft, damage, or administrative errors, leading to discrepancies between recorded inventory and actual stock levels.

Adjusting Entry

An accounting record created at the conclusion of a fiscal period to distribute revenues and expenses to the period they truly belong to.