If the Principal Objective of a Firm Is to Enhance

question 50

Multiple Choice

If the principal objective of a firm is to enhance wealth, the most important budget target to meet is:

• A) sales.
• B) profit.
• C) bank balance.
• D) production.

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Definitions:

Indirect Method

A technique, often used in cash flow statements, that adjusts net income for non-cash transactions to compute cash flow from operating activities.

Net Income

Net Income is the total revenue of a company minus all expenses and taxes, representing the profit earned during a specific period.

Net Cash

The amount of cash a company has after all its cash inflows and outflows have been accounted for, often used in the context of operating, investing, and financing activities.

Depreciation Expense

The allocation of the cost of a tangible asset over its useful life, reflecting the asset's consumption, wear and tear, or obsolescence.