The Assumption That Enables Us to Prepare Periodic Statements Between

question 49

Multiple Choice

The assumption that enables us to prepare periodic statements between the time that a business commences operations and the time it goes out of business is:

• A) time period
• B) business entity
• C) historical cost
• D) transaction
• E) none of the answers are correct

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Definitions:

Dividend Irrelevance Theory

A theory suggesting that an investor's choice between investing in companies that pay dividends and those that do not does not affect the investor's overall return.

Reducing Near-Term Dividends

A financial strategy involving the reduction of dividend payouts to shareholders in the short-term, typically with the aim of reallocating funds for company growth or debt reduction.

Future Dividends

Predicted payments made by a corporation to its shareholders out of its earnings in the future.

Stock Split

An action by a company to divide its existing shares into multiple shares to boost the liquidity of the shares, although the firm's overall market capitalization remains unchanged.