When Making Financial Decisions Related to Assets,you Should

question 42

Multiple Choice

When making financial decisions related to assets,you should:

• A) always consider market values.
• B) place more emphasis on book values than on market values.
• C) rely primarily on the value of assets as shown on the balance sheet.
• D) place primary emphasis on historical costs.
• E) only consider market values if they are less than book values.

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Definitions:

Outstanding Shares

The total shares of a corporation that are currently owned by all its shareholders, including share blocks held by institutional investors and restricted shares owned by the company’s officers and insiders.

Authorized Shares

The maximum number of shares of stock a corporation can issue as specified in its charter.

Investors

Individuals or entities that allocate capital to different types of investments with the expectation of generating a future return.

Residual Claim

A claim on a company's assets and income that is only payable after all other debts and liabilities have been settled.