Which of the Following Is Not a Reason for a Company

question 20

Multiple Choice

Which of the following is not a reason for a company making a bonus issue of shares?

• A)To use cash.
• B)As a signal to the market of the company's confidence in its future.
• C)To reduce its share price when it has become too high.
• D)None of the above, i.e., all are reasons for making a bonus issue.

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Definitions:

Periodic Method

An accounting system where inventory values and cost of goods sold are determined at the end of an accounting period.

Cost of Goods Sold

Costs directly linked to the manufacturing of products sold by a business, encompassing the expenses of materials and labor specifically employed in the product's production.

Gross Profit

The difference between sales revenue and the cost of goods sold before deducting overheads, payroll, taxation, and interest payments.

Periodic Inventory System

An inventory accounting system where stock levels are updated at regular intervals, not continuously.