Which of the Following Statements Is True Regarding the Profitability

question 117

Multiple Choice

Which of the following statements is true regarding the profitability of new businesses?

• A) It may take several years for a new business to begin showing a profit.
• B) Profitability is not an important issue for new businesses.
• C) Most new businesses will turn a profit within the first year.
• D) If a company does not show a profit within the first year, it will fail.
• E) Most new businesses are highly profitable when they first start.

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Definitions:

Privately Owned

Properties or businesses that are owned by individuals or corporations rather than by the government or public.

Corporation

A legal entity recognized by law as separate from its owners, with rights to own assets, incur liabilities, and conduct business.

Closely Held

A business structure where the ownership is concentrated in a small group of individuals, often family members.

Agency Relationships

A legal and fiduciary relationship between two parties, where one party, the agent, is authorized to act on behalf of another, the principal, in business transactions.