Baxter's,Inc

question 51

Multiple Choice

Baxter's,Inc.generally holds $125,000 in cash in case an unexpected investment opportunity arises.Which one of the following refers to holding cash for this type of purpose?

• A)Precautionary motive
• B)Opportunistic motive
• C)Speculative motive
• D)Reserve motive
• E)Transaction motive

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Definitions:

Historic Cost

The original monetary value of an asset or transaction at the time it occurred, without adjustments for inflation or other factors.

Partner Withdraws

Amounts taken out of a partnership by a partner for personal use, reducing the partner's capital account in the business.

Capital Account

An account on a nation's balance of payments that records all transactions involving the purchase or sale of assets, or in business, the account showing the net worth of a business entity.

Bonus

An extra payment given to employees as an incentive or reward beyond their regular compensation.