In Order to Reduce Production Costs, Everlasting Tire Decided to Buy

question 91

Multiple Choice

In order to reduce production costs, Everlasting Tire decided to buy out a rubber plant and begin manufacturing their own rubber for their tires. The corporate strategy adopted by the company is known as:

• A) concentration.
• B) vertical integration.
• C) related diversification.
• D) unrelated diversification.
• E) differentiation.

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Definitions:

Income Measurement

The process of determining the monetary amount of the income earned by a business during a specific period.

Constructive Receipt

A tax principle stating that income is considered received by the taxpayer once it is credited to their account or made available without restriction.

Taxable Income

The portion of income used to calculate how much the entity owes in taxes to the government, after all deductions and exemptions are applied.

Ability To Pay

The financial capacity of an individual or entity to meet financial obligations or commitments without incurring undue hardship.