Which of the Following Forms of Diversification Occurs When a Firm

question 107

Multiple Choice

Which of the following forms of diversification occurs when a firm operates multiple businesses within the same industry?

• A) Related diversification
• B) Hierarchical diversification
• C) Conglomerate diversification
• D) Horizontal diversification

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Definitions:

Expenses Paid

Refers to the amounts of money disbursed to cover operating costs or charges incurred in the conduct of a business.

Expense Recognition Principle

An accounting principle that expenses should be recognized in the period in which they are incurred, matching them with the revenues they help to generate.

Time Period Assumption

An accounting principle that allows an organization to divide its economic activities into specific time periods such as months, quarters, or years for reporting purposes.

Adjusting Entries

Closing entries in accounting at the end of a period to ensure income and expenses are attributed to the period in which they took place.