Which of the Following Statements Is Correct

question 93

Multiple Choice

Which of the following statements is correct?

• A)A current ratio of 1.60 means the company's current assets are probably not sufficient to pay its current liabilities.
• B)The separate entity assumption requires that the financial activities of the owners of a company be reported on the company's balance sheet.
• C)The cost principle states that recording activities at cost will result in the balance sheet representing the true value of the company.
• D)A transaction is recorded if it has a measurable financial effect on the assets,liabilities or stockholders' equity of a business.

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Definitions:

Pricing Objectives

Goals that a company wants to achieve through its pricing strategies, including maximizing profit, increasing market share, or positioning the product.

Strategic Decisions

High-level choices made by senior management that set the long-term direction and objectives of an organization.

Pricing

The process of determining the monetary value at which a good or service will be sold in the market.

Predatory Pricing

The practice of first setting prices low with the intention of pushing competitors out of the market or keeping new competitors from entering the market, and then raising prices to normal levels.