Which of the following are the two crucial elements of a company's business model?

• A. Assets and liabilities
• B. Debits and credits
• C. Revenues and expenses
• D. Value proposition and profit formula

Answer: (D)

Verified step by step guidance

1. Understand the concept of a business model: A business model outlines how a company creates, delivers, and captures value. It is a framework for understanding the company's strategy and operations.
2. Identify the two crucial elements of a business model: The value proposition and the profit formula. These elements are essential for explaining how a company generates value for customers and achieves profitability.
3. Define the value proposition: This refers to the unique benefits or solutions a company offers to its customers, addressing their needs and differentiating the company from competitors.
4. Define the profit formula: This explains how the company generates profit, including its revenue model, cost structure, and margin strategy. It ensures the business is financially sustainable.
5. Recognize why assets, liabilities, debits, credits, revenues, and expenses are not the correct answer: These are accounting terms used to record and analyze financial transactions, but they do not directly describe the strategic framework of a business model.