What Is One of the Major Benefits Derived from Target-Return

question 175

Multiple Choice

What is one of the major benefits derived from target-return objectives?

• A) They eliminate competition.
• B) They generate excess profit.
• C) They encourage increased investments by stockholders.
• D) The serve as a means of evaluating performance.

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Definitions:

Initial Value Method

An accounting method which records assets and investments at their original purchase cost.

Lower-of-Cost-or-Market-Value

An accounting principle requiring that inventory be recorded at the lower of either its historical cost or its current market value.

Book Value

The value of an asset as reported on a company's balance sheet, calculated as the cost of the asset minus any accumulated depreciation.

Impairment Model

Impairment Model is an accounting method that requires assets to be reviewed for impairment, whereby their carrying value is adjusted to reflect their recoverable amount if this is less than their current book value.