Multiple Choice
Which of the following is more relevant to management accounting than to cost accounting?
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1. Introduction to Accounting
Types of Accounting
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Which of the following is a disadvantage of buying an existing business?
A
You may inherit existing problems such as poor reputation or outdated equipment.
B
You avoid the challenges of building a brand from scratch.
C
You benefit from existing supplier relationships.
D
You can immediately start generating revenue from established customers.
Verified step by step guidance1
Understand the context of the question: It is asking about the disadvantages of buying an existing business, so focus on identifying potential drawbacks rather than benefits.
Analyze each option provided in the question. For example, 'You may inherit existing problems such as poor reputation or outdated equipment' clearly highlights a disadvantage.
Compare the other options ('You avoid the challenges of building a brand from scratch,' 'You benefit from existing supplier relationships,' and 'You can immediately start generating revenue from established customers') to determine if they represent advantages rather than disadvantages.
Recognize that the correct answer is the option that explicitly mentions a drawback or negative aspect of buying an existing business.
Conclude that inheriting existing problems such as poor reputation or outdated equipment is the disadvantage being referred to in the question.
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