In Accounting, Emphasis Is Placed on Determining Net Income in Accordance

question 3

True/False

In accounting, emphasis is placed on determining net income in accordance with generally accepted accounting principles.In finance, the primary emphasis is also on net income because that is what investors use to value the firm.However, a secondary financial consideration is cash flow, because cash is needed to operate the business.

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Definitions:

Cost of Debt

The effective rate that a company pays on its borrowed funds from external sources.

Cost of Capital

The rate of return a company must earn on its investments to maintain its market value and satisfy its investors and creditors.

Financial Decision Making

The process of making choices related to investments, budgeting, and spending strategies to optimize financial goals.

Top Managers

Executives at the highest level of organizational management who are responsible for the overall direction and success of the company.