Determining Firm Performance Is a Complex Interaction of Firm Effects

question 30

Multiple Choice

Determining firm performance is a complex interaction of firm effects and industry effects,with other factors also considered.Based on historical analysis,what do we know about firm and industry effects?

• A) Managerial actions rather than firm effects have a large role in firm performance.
• B) Macro environmental effects such as a recession have more impact than either firm or industry effects.
• C) Firm effects have more impact on performance than industry effects.
• D) Industry effects have more impact on performance than firm effects.

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Definitions:

Normal Balance

The side (debit or credit) of an account that is expected to have a higher balance, based on the account type.

Temporary/Permanent

Categories used to distinguish between accounts that are closed at the end of an accounting period (temporary) and those that carry forward their balance into future periods (permanent).

Accrued Interest

Interest on loans or bonds that has accumulated but not yet been paid.

Note Receivable

An asset account representing amounts owed to a company by customers or others who have signed promissory notes in favor of the company.