An Investor Will Provide Money for a Start-Up Business Only

question 47

Multiple Choice

An investor will provide money for a start-up business only if the entrepreneur will agree to giving the investor the right to approve any purchase or sale of assets totaling $100,000 or more. This is know as

• A) a proforma statement.
• B) a breakeven statement.
• C) a mandatory redemption.
• D) a covenant.
• E) a business angel.

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Definitions:

Accelerated Depreciation

A method of depreciation that allows larger depreciation expenses in the early years of an asset's life and smaller expenses in the later years.

Useful Life

The estimated period over which a fixed asset is expected to be usable by a company, influencing depreciation calculations.

Plant Asset

A plant asset is a long-term tangible asset used in the operation of a business that is not intended for resale, such as machinery, buildings, and equipment.

Market Value

The immediate cost at which one can buy or sell a service or asset.