Which of the Following Statements Is TRUE Concerning Domestic Expansion

question 7

Multiple Choice

Which of the following statements is TRUE concerning domestic expansion of a business?

• A)Obligations of a new division are separate from the founding corporation.
• B)Cash funding requirements will be higher to establish a corporation than a corporate division if the expansion activity incurs substantial start-up losses.
• C)The main advantage of incorporating an expansion activity is the use of start-up losses against income from other divisions of the founding corporation.
• D)Cash funding requirements will be lower to establish a corporation than a corporate division if the expansion activity incurs substantial start-up losses.

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Definitions:

Direct Cost

Expenses that can be directly traced to the production of specific goods or services, such as raw materials and direct labor.

Instructor's Salary

The compensation, often periodic, given to a teacher or educator for their services.

Accounting Course

An educational class or program that teaches the principles, standards, and practices of accounting.

Cost Of Goods Sold

Cost of Goods Sold (COGS) represents the direct costs attributable to the production of goods sold by a company, including material and labor costs.