When Deciding Whether to Discontinue a Segment of a Business

question 112

Multiple Choice

When deciding whether to discontinue a segment of a business, relevant costs include ________.

• A) auditing expenses for the whole company
• B) fees paid to a management consultant to study the feasibility of the business segment
• C) annual insurance costs of the company
• D) future administrative costs that can be eliminated

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Definitions:

Settlement

The process of concluding a transaction or dispute by all parties involved agreeing to terms, often involving the payment of funds.

Promissory Notes

Written promises to pay a specified sum of money to a named party on demand or at a determined future date.

Carrying Amount

The book value of assets and liabilities reported on the balance sheet, calculated as the original cost less any depreciation, amortization, or impairment costs.

Interest-Bearing

Referring to a financial instrument or account that generates interest income over time.