External Users Want Answers to All of the Following Questions

question 99

Multiple Choice

External users want answers to all of the following questions except:

• A)Is the company earning satisfactory income?
• B)Will the company be able to pay its debts as they come due?
• C)Will the company be able to afford employee pay raises this year?
• D)How does the company compare in profitability with competitors?

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Definitions:

Investment Center

A business unit or department that is responsible for its own revenues, expenses, and investment in assets, with its performance measured by its return on investment.

Controllable Margin

The portion of profit or income directly influenced by the management decisions, typically excluding fixed costs.

Required Return

The minimum expected return by investors for providing capital, based on the risk of the investment.

Operating Assets

Assets used in the daily operations of a business to generate revenue, such as machinery, building, and equipment.