Barry Bay Runs a Small Contracting Business That He Operates

question 33

Multiple Choice

Barry Bay runs a small contracting business that he operates as a corporation.He never had to borrow money, and he is the only shareholder.What is most likely to be the objective when preparing his financial statements?

• A)Performance evaluation
• B)Cash flow prediction
• C)Income smoothing
• D)Tax minimization

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Definitions:

Bankruptcy Law

The body of laws that governs the process by which individuals or entities unable to repay debts to creditors may seek relief through the division of assets among creditors or the creation of a repayment plan.

Security Agreement

A legal document that provides a lender a security interest in a specified asset or property, which serves as collateral for a loan.

Debtor

An individual or entity that owes a debt to another called a creditor, typically arising from a loan or other financial obligation.

Secured Party

A lender or creditor in a secured transaction who has a legal interest or lien on collateral provided by the debtor.