Which of the Following Statements About Valuing a Business Is

question 75

Multiple Choice

Which of the following statements about valuing a business is true?

• A) The balance sheet technique is the best way to value a business.
• B) Business valuation is partly art and partly science.
• C) Buyers should rely on the seller's industry expertise and years of experience to determine what his company is worth.
• D) Business valuation processes are consistently misleading regarding the future earning potential of a business.

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Definitions:

Perpetual Inventory System

A system of inventory accounting that immediately logs inventory sales or purchases using computerized point-of-sale systems and software for managing enterprise assets.

Purchases Returns

Transactions involving the return of goods previously bought to the seller, typically due to defects or issues.

Accounts Payable

Liabilities owed by a business to creditors for purchases or services received that have not yet been paid for.

Periodic Inventory System

A method used in accounting to determine inventory levels by taking physical counts at specific periods.