Which One of the Following Actions Best Meets the Goal

question 218

Multiple Choice

Which one of the following actions best meets the goal of financial management?

• A) Deciding a firm should be 100% equity financed.
• B) Delaying cash payments in order to increase the total cash on hand.
• C) Easing the accounts receivable policies in order to increase current sales.
• D) Accepting a project that enhances the current market value of the firm's stock.
• E) Issuing additional shares of stock to increase the total cash on hand.

Understand the basic assumptions underlying financial accounting, such as the going concern assumption.

Identify and understand the elements of financial statements (assets, liabilities, equity, revenue, and expenses).

Comprehend the rationale behind using historical cost for asset valuation in financial statements.

Recognize the conditions under which the going concern assumption may not be appropriate.

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Definitions:

Dividend Yield

An indicator of the proportion of dividends disbursed annually by a company to the price of its shares.

Preemptive Rights

Rights that allow existing shareholders to purchase additional shares before the company offers them to the public, helping to maintain their ownership percentage.

New Stock Issues

New Stock Issues pertain to the release of additional shares into the public market by a company, aimed at raising capital.

Shareholders

Individuals or entities that own one or more shares of stock in a public or private corporation, giving them partial ownership.