The ____ the Risk of Receiving Future Cash Flows, the ____

question 7

Multiple Choice

The ____ the risk of receiving future cash flows, the ____ will be the present value of those cash flows.

• A) greater, greater
• B) greater, lower
• C) lower, lower
• D) lower, greater

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Definitions:

Goodwill Method

An accounting approach for handling goodwill during a business combination, where goodwill is not amortized but tested annually for impairment.

Capital Balances

The amounts shown in a company’s books representing the capital owned by partners or shareholders.

Profit and Loss

A financial statement, also known as an income statement, that provides a summary of a company's revenues, expenses, and profits/losses over a given period of time.

Partnership

A formally established way of running a business by two or more participants who equally handle the administration and profit-sharing.