A Primary Operating Objective of a Business Is to Increase

question 153

Multiple Choice

A primary operating objective of a business is to increase the equity of its owner or owners by:

• A) Acquiring assets.
• B) Incurring liabilities.
• C) Earning a profit.
• D) Incurring expenses.
• E) Increasing retained earnings.

---

Definitions:

Variable Cost

Variable Cost refers to costs that change in proportion to the level of goods or services that a business produces.

Sales Commissions

Sales commissions are payments made to salespersons for selling products or services, typically a percentage of the sale price.

Chief Financial Officer

A senior executive responsible for managing the financial actions of a company.

Operating Leverage

A measure of how sensitive a company's operating income is to a change in revenues, indicating the extent to which a firm can increase profits by increasing sales.