A Financial Performance Measure Based on the Difference Between a Firm's

question 45

Multiple Choice

A financial performance measure based on the difference between a firm's actual earnings and required earnings is sometimes called:

• A)clean surplus relationship.
• B)economic value added.
• C)accounting earnings identity.
• D)payout-retention identity.
• E)dividend valuation equation.

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Definitions:

Implied Warranty

A legal assumption that the goods sold are fit for their intended purpose, even if not explicitly promised by the seller.

Express Warranty

A written or verbal promise made by a seller to a buyer, guaranteeing the quality or functionality of a product or service.

Merchantability

A guarantee that a product will meet reasonable expectations of quality and usability for which it was sold.

Nonconforming Goods

Goods shipped that do not meet the specifications or requirements set out in the contract of sale.