Which of the Following Illustrates How a Company Could Be

question 211

Multiple Choice

Which of the following illustrates how a company could be irresponsible with respect to its investors?

• A) The company uses profits to fund research and development.
• B) The president overstates the positive impact of a new contract.
• C) The board of directors declares a stock split.
• D) Management accepts a takeover bid from another company.
• E) No dividends are declared even though the company made a profit.

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Definitions:

First-In, First-Out Method

An inventory valuation method where goods first received are the first to be sold or used, assuming that older inventory is sold before newer stock.

Cost Reconciliation Report

A document that analyzes and reconciles the differences between the cost of beginning inventory, the cost of goods manufactured, and the cost of goods sold.

Work in Process Inventory

Goods that are in various stages of completion in the production process but are not yet finished products.

Direct Method

An approach to costing that identifies the variable costs directly attributable to specific cost objects, like products or services.