Financial gaps are created when:
A) profits and retained earnings are greater than the capital-spending requirement.
B) profits and retained earnings are less than the capital-spending requirement.
C) profits and retained earnings are equal to the capital-spending requirement.
D) profits and retained earnings are greater than or equal to the capital-spending requirement.

Question

Quizplus · Accepted Answer

Financial gaps occur when profits and retained earnings are not sufficient to cover the capital-spending requirement. In option B, profits and retained earnings are less than the capital-spending requirement, which creates a financial gap. The other options indicate that there is no financial gap.

Financial Gaps Are Created When