Which One of the Following Is NOT a Real Option

question 8

Multiple Choice

Which one of the following is NOT a real option?

• A) The option to expand production if the product is successful.
• B) The option to buy shares of stock if its price is expected to increase.
• C) The option to expand into a new geographic region.
• D) The option to abandon a project if cash flows turn out to be lower than expected.
• E) The option to switch the type of fuel used in an industrial furnace to lower the cost of production.

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Definitions:

Closing Entries

Journal entries made at the end of an accounting period to transfer balances from temporary accounts to permanent accounts, closing out the period.

Retained Earnings

Profits that a company has earned to date, less any dividends or other distributions to shareholders, reinvested in the business or kept as reserve.

Closing Entries

Journal entries made at the end of an accounting period to transfer the balances of temporary accounts to permanent ones, thus preparing the books for the next period.

Adjusted Trial Balance

An enumeration of every account and its balance following adjustment entries, employed in the development of financial reports.