Building a Model for Long-Term Forecasting Reveals Points in the Future

question 20

Multiple Choice

Building a model for long-term forecasting reveals points in the future where the firm will need ________ when retained earnings are not enough to fund planned future investments.

• A)mergers
• B)external financing
• C)stock dividends
• D)dividend payments

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Definitions:

Cash Basis

An accounting method where revenues are recognized when cash is received, and expenses are recorded when cash is paid out.

Accounting

The systematic process of recording, summarizing, and analyzing an organization's financial transactions.

GAAP

Generally Accepted Accounting Principles; the common set of accounting standards and procedures used in the U.S.

Accrual Basis

The accrual basis of accounting records revenues and expenses when they are earned or incurred, regardless of when cash is exchanged.