Multiple Choice
Which one of the following is NOT a financial decision made within a firm?
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1. Introduction to Accounting
Types of Accounting
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Which of the following is NOT a reason for a business combination to take place?
A
To increase market share and competitiveness
B
To achieve economies of scale
C
To decrease access to financial resources
D
To diversify product offerings
Verified step by step guidance1
Step 1: Understand the concept of a business combination. A business combination occurs when two or more companies merge or acquire one another to achieve strategic goals such as growth, efficiency, or diversification.
Step 2: Analyze the reasons for a business combination. Common reasons include increasing market share and competitiveness, achieving economies of scale (cost savings through larger operations), and diversifying product offerings to reduce risk.
Step 3: Evaluate the option 'To decrease access to financial resources.' This does not align with the typical goals of a business combination, as businesses generally aim to improve financial resources, not decrease them.
Step 4: Compare the given options to the typical reasons for business combinations. Identify which option does not fit the strategic goals of mergers or acquisitions.
Step 5: Conclude that the correct answer is the option that contradicts the purpose of a business combination, which is 'To decrease access to financial resources.'
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