Which of the Following Statements Is TRUE Concerning Domestic Expansion

question 8

Multiple Choice

Which of the following statements is TRUE concerning domestic expansion of a business?

• A) The main advantage of incorporating an expansion activity is the use of start-up losses against income from other divisions of the founding corporation.
• B) Cash funding requirements will be lower for a corporation than a corporate division if the expansion activity incurs start-up losses.
• C) Obligations of a new division are separate from the parent company due to the limited liability of the division.
• D) Cash funding requirements will be higher for a corporation than a corporate division if the expansion activity incurs start-up losses.

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Definitions:

Economic Problem

The issue of limited resources to meet unlimited wants and needs, requiring choices and prioritization.

Centralized Decision Making

A process where decisions are made by a few people or a single authority, rather than being dispersed among many.

Destroy Incentives

To eliminate or significantly reduce the motivations or reasons for individuals or entities to take a particular action or endeavor.

Society's Resources

The total means available to a society, including natural resources, human capital, and manufactured goods, used for production and consumption.