ACCA Applied Knowledge · Business and Technology · The purpose and types of business organisation
Which of the following best describes the primary objective of a typical private sector, profit-seeking company?
The primary objective of a typical profit-seeking company is to maximise the wealth of its owners, the shareholders. Free provision of services belongs to public or charitable bodies, and equal redistribution of income to employees is not a normal commercial aim.
- ATo maximise the wealth of its ownersCorrect
- BTo provide services free of charge to the public
- CTo redistribute income to its employees equally
Explanation
A profit-seeking company is usually established to generate returns for its shareholders, so shareholder wealth maximisation is the primary objective. Providing free services is typical of public sector or charitable bodies. Equal redistribution of income to employees is not a normal commercial objective.
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