The Two Most Compelling Reasons for a Company to Pursue

question 106

Multiple Choice

The two most compelling reasons for a company to pursue vertical integration (either forward or backward) are to

• A)strengthen the company's competitive position and/or boost its profitability.
• B)achieve product differentiation and/or lengthen the company's value chain to include more activities performed in-house and thereby gain greater ability to reduce internal operating costs.
• C)broaden the firm's product line and/or avoid the need for outsourcing.
• D)expand into foreign markets and/or control more of the industry value chain.
• E)enable use of offensive strategies and/or gain a first-mover advantage over rivals in revamping the industry value chain.

---

Definitions:

Journalized

The process of recording financial transactions in a company's journal, detailing the accounts affected by each transaction.

Adjusting Entries

Are journal entries made at the end of an accounting period to allocate income and expenditure to the period in which they actually occurred, for the purpose of financial reporting accuracy.

Financial Statements

Documents that present an organization's financial activity and current financial condition, including the balance sheet, income statement, and cash flow statement.

Nominal Accounts

Accounts that are closed at the end of each accounting period, including revenue, expense, and withdrawal accounts.