A Franchisor Discloses a Cautionary Statement That Reads, "Caution: Some

question 68

Multiple Choice

A franchisor discloses a cautionary statement that reads, "Caution: Some outlets have sold this amount. There is no assurance you'll do as well. If you rely upon our figures, you must accept the risk of not doing so well." This is an instance of ________.

• A) disclosure of earning projections based on actual data
• B) disclosure of sales projections based on hypothetical data
• C) nondisclosure of sales or earnings projections
• D) fraudulent disclosure by the franchisor

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Definitions:

Amortization

The process of gradually writing off the initial cost of an intangible asset over its useful life.

Interest Expense

This is the cost incurred by an entity for borrowed funds over a period of time.

Bondholder Claims

The rights that bondholders have to the issuer's assets and income, usually in the form of interest payments and the return of principal at maturity.

Corporation Assets

Corporation assets are all owned resources of a corporation, including tangible and intangible items, that have value and can be used to produce goods or services.