Business Rationalization Process

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Questions and Answers

How does rationalisation impact the size of a firm?

It only increases the size of the firm
It has no impact on the size of the firm
It can increase or decrease the size of the firm (correct)
It only decreases the size of the firm

Why is rationalisation valued by corporate entities?

It leads to random adjustments without any specific goal
It increases waste in terms of labour, time, and resources
It has no impact on the financial statement's bottom line
It helps reduce expenses and boost revenues (correct)

What is rationalisation in a business context?

A process of reducing sales and increasing costs
A process of random adjustments without any specific goal
A process of increasing business size without any changes in strategy
A process of restructuring to improve operational effectiveness (correct)

What does a rationalisation process aim to achieve?

Boost sales, save costs, and improve the bottom line (B) Signup and view all the answers

What is the primary purpose of rationalisation in a corporation?

To decrease waste in terms of labour, time, and resources and to streamline operations for the benefit of a corporation (C) Signup and view all the answers

What type of business transactions are taken into account in Financial Accounting?

Only those expressed in monetary terms (B) Signup and view all the answers

What nature of transactions are captured and recorded under the system of financial accounting?

Transactions that have already taken place in the past (A) Signup and view all the answers

What type of transactions are out of the preview of financial accounting?

Transactions of paramount importance that cannot be expressed in monetary terms (D) Signup and view all the answers

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Study Notes

Rationalisation in a Business Context

Rationalisation is the process of reorganising a company's operations to increase efficiency and reduce costs.
It aims to achieve a more streamlined and efficient business, often resulting in a reduction in the size of the firm.
Corporate entities value rationalisation as it helps to eliminate unnecessary costs, improve productivity, and enhance competitiveness.

Financial Accounting

Financial accounting involves the recording and reporting of business transactions that are monetary in nature.
The system captures and records transactions that are financial, such as sales, purchases, and payments.
Non-monetary transactions, such as executive decisions or management restructuring, are outside the scope of financial accounting.