Which of the Following Reasons Best Explains Why a Company

question 84

Multiple Choice

Which of the following reasons best explains why a company that experiences seasonal fluctuations in sales may purchase investments in debt or share securities?

• A) The company may have excess cash.
• B) The company may generate a significant portion of its earnings from investment income.
• C) The company may invest for the strategic reason of establishing a presence in a related industry.
• D) The company may invest for speculative reasons to increase the value in pension funds.

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Definitions:

Statement of Cash Flows

A financial statement that provides aggregate data regarding all cash inflows a company receives from its ongoing operations and external investment sources, as well as all cash outflows that pay for business activities and investments during a given period.

Financial Position

The status of a company's assets, liabilities, and equity at a specific point in time, typically shown in the balance sheet.

Note Disclosures

Refers to additional information provided in a company's financial statements, which helps in understanding the numbers presented and includes details such as accounting policies and future obligations.

AASB 101

The Australian Accounting Standards Board document specifying the presentation of financial statements, providing guidelines for structure and minimum requirements for their content.