A Firm That Earns Less Than 70% of Revenue from Its

question 9

Multiple Choice

A firm that earns less than 70% of revenue from its dominant business and has direct links between its businesses is engaging in ____ diversification.

• A) unrelated
• B) related constrained
• C) related linked
• D) dominant

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Definitions:

Journal Entries

These are recordings of financial transactions in the accounting books, documenting the debit and credit accounts affected by each transaction.

Purchase

The action of buying goods or services for business use or resale.

Par Value

The face value of a bond or stock, representing the amount the issuer agrees to pay at maturity (for bonds) or the nominal value of a share.

Carrying Value

Also known as the book value, it is the value of an asset as reported on the balance sheet, calculated as the original cost minus accumulated depreciation, depletion, or amortization.