Which of Following Generally Does Not Indicate an Unreasonable Earnings

question 45

Multiple Choice

Which of following generally does not indicate an unreasonable earnings accumulation?

• A)loans to shareholders
• B)expenditure of corporate funds for the personal benefit of the shareholders
• C)planned expansion of business facilities
• D)investments in properties or securities unrelated to the activities of the corporation

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Definitions:

Retail Chain

A network of stores operated by the same company, offering similar or related products or services to consumers.

Discount Rate

The interest rate used in discounted cash flow analysis to determine the present value of future cash flows or investments.

Cash Flows

The movement of money into and out of a company from operational, investment, and financing activities.

Shares Outstanding

The total number of shares of a corporation that are in the hands of the public, including shares held by institutional investors.