Among the Six Principles of Finance, All Are Included Except

question 27

Multiple Choice

Among the six principles of finance, all are included except:

• A) All decisions are ultimately financial decisions.
• B) Higher returns are expected for taking on more risk
• C) Diversification of investments can reduce risk
• D) Financial markets are efficient in pricing securities

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Definitions:

Sales Discount

A sales discount is a reduction in the price of goods or services offered by a seller to a buyer, typically to encourage early payment or bulk purchases.

Perpetual Inventory

An inventory system that updates item records continuously as transactions occur.

2/10, n/30

A common credit term indicating that a buyer can take a 2% discount on the invoice price if payment is made within 10 days; otherwise, the net amount is due in 30 days.

FOB Destination

A shipping term indicating that the seller bears freight charges and remains responsible for the goods until they are delivered to the buyer's location.