Adam Owns a Software Development Company

question 63

Multiple Choice

Adam owns a software development company.He and his team developed and licensed new software that could help many organizations strengthen their web security.Any organization that wishes to use Adam's licensed software would most likely have to pay him in the form of a _____.

• A) pay-off
• B) royalty
• C) lump sum payment
• D) payout

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Definitions:

Fair-value Method

An accounting strategy used for valuing and assessing assets and liabilities based on current market prices or estimates.

Equity Method

An accounting technique used to assess the earnings of an investment in another company by recognizing the income earned proportional to ownership interest.

Accounting Principle

A guideline or rule that shapes the theoretical basis for accounting practices and financial reporting.

Intra-entity Gross Profits

Profits realized from transactions conducted within the same legal entity, often requiring elimination for accurate consolidated financial reporting.