Which of the Following Statements Is CORRECT

question 45

Multiple Choice

Which of the following statements is CORRECT?

• A) A good goal for a firm's management is the maximization of expected EPS.
• B) Most business in the U.S. is conducted by corporations, and corporations' popularity results primarily from their favorable tax treatment.
• C) Conflicts can exist between stockholders and managers, but potential conflicts are reduced by the possibility of hostile takeovers.
• D) Corporations and partnerships have an advantage over proprietorships because a sole proprietor is exposed to unlimited liability, but the liability of all investors in the other types of businesses is more limited.
• E) For a stock to be in equilibrium, its intrinsic value must be greater than the actual market price.

---

Definitions:

Supplier's Account

An account kept by a business to record transactions (like purchases and payments) related to a specific supplier.

Purchases Journal

A specialized accounting journal used to record all purchases of merchandise, inventory, and other supplies on credit.

Life Vests

Safety devices designed to keep an individual afloat in water and reduce the risk of drowning.

Customer Account

An account that records all transactions between a business and its customers, including purchases, payments, and credits.