According to the Signaling Theory, Which of the Following Is

question 61

Multiple Choice

According to the signaling theory, which of the following is considered a signal from an investor's point of view?

• A) A small company raising any required new capital by issue of new shares
• B) A mature company raising any required new capital by issue of new shares
• C) A small company maintaining a reserve borrowing capacity
• D) A mature company maintaining a reserve borrowing capacity
• E) A mature company raising any required new capital using debt beyond the normal target capital structure

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Definitions:

Process Costing System

An accounting method used where similar goods are produced in a continuous process, distributing costs over the units produced, making it easier to ascertain per unit cost.

Weighted-Average Method

A method of inventory costing that assigns a weighted average cost to each item in inventory, used in both perpetual and periodic inventory systems.

Process Costing System

A costing methodology used in manufacturing where costs are assigned to batches of products rather than individual items, suitable for homogeneous products.

Equivalent Units

The product of the number of partially completed units and their percentage of completion with respect to a particular cost. Equivalent units are the number of complete whole units that could be obtained from the materials and effort contained in partially completed units.