Which of the Following Is Not a Disadvantage of a Systematic

question 53

Multiple Choice

Which of the following is not a disadvantage of a systematic liquidation?

• A)the treatment and taxation of liquidation proceeds as ordinary income rather than capital gains
• B)the commitment of the entrepreneur's resources and focus on a dying venture rather than on other more lucrative ventures
• C)the harvesting of the investment gets spread out over a number of years
• D)the acceleration of the venture's rate of decline as other industry participants respond to the reduction in investment

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Definitions:

Investing Section

A part of a company's cash flow statement that shows the cash spent on or generated from investment activities, such as purchasing physical assets or securities.

Capital Assets

Long-term assets acquired for operation and not for resale, typically including buildings, machinery, and equipment.

Direct Method

A method of allocating service department costs directly to producing departments without considering interactions among service departments.

Operating Activities

Activities that constitute the primary or main activities of an organization, including sales, supply, and production functions, often reflected in the cash flow statement.