Shareholder Value Analysis Holds That the Flow of Profits Emanating

question 12

True/False

Shareholder value analysis holds that the flow of profits emanating from an investment should exceed the cost of capital.

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Definitions:

Income Summary

A temporary account used in accounting to aggregate all income and expense accounts for a period, facilitating the transfer of their balances to permanent equity accounts.

Closing Entries

Journal entries made at the end of an accounting period to transfer the balances of temporary accounts to permanent accounts and prepare the company's books for the next period.

Income Summary

A temporary account used in closing process to summarize the results of a period's revenues and expenses.

Adjusting Entry

Journal entries made in accounting records at the end of an accounting period to allocate income and expenditures to the period in which they actually occurred.