Which of the Following Is the Overarching Principle That a Financial

question 91

Multiple Choice

Which of the following is the overarching principle that a financial manager should follow when making decisions?

• A) Decisions should generate the greatest benefits for the firm.
• B) Decisions should provide benefit to the firm without incurring costs.
• C) Decisions should be on behalf of the firm's owners that give the greatest benefit to those owners, the firm's employees and the firm's other stakeholders.
• D) Decisions should increase the value of the firm to its investors.

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Definitions:

FIFO

First-In, First-Out, an inventory valuation method where goods or materials purchased first are the first to be sold or used.

LIFO

"Last In, First Out," an inventory valuation method where the last items added to inventory are considered sold first.

Retail Inventory Method

An accounting method used by retailers to estimate their ending inventory balances by applying a cost-to-retail price ratio to the retail value of the inventory.

Cost-to-retail Ratio

A method used to estimate the value of ending inventory based on the ratio of the cost of goods available for sale to the retail price of those goods.