For a Firm to Survive Over the Long Term It

question 17

Multiple Choice

For a firm to survive over the long term it must:

• A)Pay a satisfactory level of dividends to its shareholders
• B)Create customer loyalty,that can then be converted into profit through increasing prices
• C)Earn as rate of return that covers its cost of capital
• D)Balance the interests of all its stakeholders.

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Definitions:

Accrual Basis of Accounting

An accounting method where revenues and expenses are recorded when they are earned or incurred, regardless of when the cash is actually received or paid.

Cash Receipts and Disbursements

An accounting method that tracks the actual cash flow, recording revenues when received and expenses when paid.

Shareholders

Individuals or entities that own one or more shares of stock in a corporation, giving them ownership interest.

Form 1099-DIV

A tax form issued by banks and financial institutions to investors who receive dividends and distributions from any type of investment during a calendar year.