Profitability Refers to the Ability of the Business To

question 55

Multiple Choice

Profitability refers to the ability of the business to:

• A) pay its current and noncurrent liabilities.
• B) earn a reasonable amount of income.
• C) manage its accounts receivable and inventory.
• D) provide owners with dividends.

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Definitions:

Available-For-Sale Investments

Financial assets not classified as held-to-maturity or trading securities, which can be sold in the financial markets.

Unrealized Gain

The increase in the value of an investment that has not been sold yet, and thus, the gain is not yet realized as actual income.

Adjusting Entry

An accounting transaction recorded at the end of a financial period to adjust account balances in the ledgers.

Philosophical Questions

Deep, fundamental questions that explore the nature of reality, existence, knowledge, values, reason, mind, and language.