If a business does not earn a profit as great as might be obtained from alternative investments, its owners will be well advised to terminate the business and invest elsewhere. A business that continually operates at a loss will eventually exhaust its resources and be forced out of existence. Therefore, in order to operate successfully and survive, the owners or managers of an enterprise must direct the business in such a way that it will earn a reasonable profit.(Walter B. Meigs and Robert F. Meigs, Accounting, 6th ed.)
This question was answered on: May 23, 2022
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