A Firm May Decide to Carry an Unprofitable Item in Its

question 153

True/False

A firm may decide to carry an unprofitable item in its product mix in order to provide a complete line for its customers.

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Definitions:

Retained Earnings

Retained earnings represent the cumulative amount of net income that a company has reinvested into the business rather than distributed to shareholders as dividends.

Fair Value Method

An accounting approach that measures and reports certain assets and liabilities at their estimated current market values.

Intrinsic Value Method

A technique used to calculate the actual value of a company or asset based on its fundamental, underlying value.

GAAP

Generally Accepted Accounting Principles, a common set of accounting principles, standards, and procedures that companies in the U.S. use to compile their financial statements.