Conducting a Thorough Due Diligence Should Always Be Accomplished If

question 107

True/False

Conducting a thorough due diligence should always be accomplished if purchasing an existing corporation or franchise,but is unnecessary if acquiring a sole proprietorship.

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Definitions:

Cost Method

An accounting practice of recording an investment at its original purchase cost, without reflecting changes in market value, unless a permanent decline in value is acknowledged.

Dividend Income

Income received from owning shares in a company, typically paid out of the company's profits.

Financial Statements

Documents that provide an overview of a business's financial condition, including balance sheet, income statement, and cash flow statement, among others.

Joint Ventures

A commercial enterprise undertaken jointly by two or more parties which otherwise retain their distinct identities.