In Determining the Value of an Existing Business, One of the Potential

question 63

Multiple Choice

In determining the value of an existing business, one of the potential sources of value is the current owner's goodwill. In this case, goodwill refers to ________.

• A)the location of the business in a desirable area
• B)intangible assets such as customer service
• C)donations to local charities
• D)the current owners' membership in professional associations

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Definitions:

Perpetual Inventory Method

A system that records the sale or purchase of inventory immediately through the use of computerized point-of-sale systems and enterprise asset management software.

Accounts Payable-Emma Co.

The amount of money Emma Co. owes to its suppliers or creditors for items or services purchased on credit.

Debit Balance

A financial situation where the total debits exceed the total credits in an account, resulting in a positive account balance.

Inventory

Assets held for sale in the ordinary course of business, as well as materials and supplies used in producing goods available for sale.