If a Business Is Not Being Sold or Closed, the Amounts

question 116

Multiple Choice

If a business is not being sold or closed, the amounts reported in the accounts for assetsused in operations are based on costs. This practice is justified by the:

• A)Cost principle.
• B)Going concern principle.
• C)Revenue recognition principle.
• D)Monetary unit principle.
• E)Business entity principle.

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Definitions:

Merger Premium

The extra amount an acquiring company pays over the market price of the target company during a merger.

Equity-Financed

A method of raising capital by selling ownership stakes in the company, typically through issuing shares.

Net Present Value

A valuation method that calculates the worth of a project or investment by discounting its future cash flows to the present value.

Market Value

Market value is the current price at which an asset or service can be bought or sold in the open market.