Which of the Following Is the Way Entities Set Their

question 40

Multiple Choice

Which of the following is the way entities set their required rate of return (RRR) for investments?

• A)the RRR is based on their own past performance
• B)the RRR is based on industry averages
• C)the RRR is determined by comparing the estimated ARR with currently available yields or returns from other investments outside their industries
• D)all of the options are methods used by entities to set their RRR

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Definitions:

Accounts

Financial records that track the transactions related to a specific asset, liability, equity, revenue, or expense. These are fundamental components of the accounting system used to compile financial statements.

Accounting Equation

The foundational equation in accounting, Assets = Liabilities + Equity, representing the relationship between a company's resources and claims on those resources.

Sole Stockholder

An individual or entity that owns 100% of the shares of a corporation, holding complete control.

Transactions

The exchange of goods, services, or funds between two or more parties in business.