The Management of Five Square Corp

question 85

Multiple Choice

The management of Five Square Corp.wants to reduce the separation between ownership (by shareholders) and control of the firm (by professional managers) .Which of the following practices would best help the company do this?

• A) allowing employees to purchase the stock of the company at a discounted rate
• B) reinvesting the annual profits of the company into research and development
• C) issuing new additional shares to the existing stockholders in proportion to their current holdings
• D) declaring the annual profits as bonus dividends to the existing stockholders

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Definitions:

Long-term Debt

Debt obligations of a business that are due more than one year in the future, often used for large purchases or investments.

Reversing Entries

Journal entries made at the beginning of an accounting period to reverse or cancel out adjusting entries made at the end of the previous period.

Financial Statements

Reports that summarize a company's financial performance and position, including balance sheets, income statements, and cash flow statements.

Accounting Cycle

Refers to the series of steps followed in the accounting process to collect, process, and report financial information, culminating in closing the books at the end of the accounting period.