ENTRE: Chp 16

Which of the following is not generally considered to be very useful for any purpose other than accounting and income taxes? A. Book value B. Salvage value C. Replacement value D. Disposal value

A. Book value

____ is the determination of the amount of assets held by the firm for sale or production. A. Inventory valuation B. Capital budgeting C. Factoring D. Depreciation

A. Inventory valuation

Which of the following is a disadvantage of providing credit to customers? A. It delays the receipt of cash. B. It decreases the sales revenue. C. It lowers the chances of repeat business. D. It increases the cost of selling.

A. It delays the receipt of cash.

Which of the following is one of the disadvantages of the return on investment (ROI) analysis? A. The profits received are not the same as cash. B. The calculations involved in the method are complex. C. It does not consider annual profits in its calculations. D. It does not rely on accounting information with which investors are comfortable.

A. The profits received are not the same as cash.

_____ refers to the fixed, determinable period of utility of an asset. A. Useful life B. Salvage value C. Payback period D. Disposal value

A. Useful life

A _____ is a computer-readable tag that is unique to each item of the inventory. A. bar code B. copyright C. patent D. trademark

A. bar code

A lease in which at the end of the lease period the asset becomes the property of the lessee, possibly with an additional payment is called a(n) _____ lease. A. capital B. leveraged C. direct D. operating

A. capital

The direct cost incurred in using an asset for the purpose for which it was intended is termed as _____. A. cost of operating B. cost of owning C. whole of life cost D. cost of disposition

A. cost of operating

Operations management is primarily concerned with: A. directing and controlling. B. planning and organizing. C. staffing and planning. D. controlling and organizing.

A. directing and controlling.

Selling the rights to collect accounts receivable to an entity outside the business is called _____. A. factoring B. pledging C. reconciling D. outsourcing

A. factoring

The price at which goods and services are bought and sold between willing sellers and buyers in an arm's-length transaction is called a _____. A. fair market value B. disposal value C. replacement value D. book value

A. fair market value

A(n) _____ refers to the products that are held for sale to customers. A. inventory B. layaway C. plant D. lock box

A. inventory

A(n) _____ is the amount of inventory that results in the minimum cost, considering the cost of lost sales resulting from running out of stock, the number of units sold per day, and the number of days required to receive inventory. A. optimum stocking level B. periodic inventory C. economic order quantity D. micro inventory

A. optimum stocking level

The amount of time it takes a business to earn back the funds it paid out to obtain a capital asset is referred to as the _____. A. payback period B. synodic period C. chargeback period D. grace period

A. payback period

A _____ is the process of physically counting business assets on a set schedule. A. periodic inventory B. perpetual inventory C. just-in-time inventory D. micro inventory

A. periodic inventory

Pledging receivables will get an owner about one-half of the amount that can be collected, whereas, factoring can immediately get an owner _____ percent of the amount due. A. 90-95 B. 75-80 C. 40-45 D. 20-25

B. 75-80

_____ refers to money that is owed to a business by its customers who purchased a product on credit. A. Pledging receivable B. Accounts receivable C. Factoring receivable D. Accounts payable

B. Accounts receivable

Which of the following is the cost incurred in financing, insuring, taxing, or tracking an asset? A. Acquisition cost B. Cost of owning C. Cost of operating D. Replacement cost

B. Cost of owning

_____ is the cost incurred to substitute one asset with an identical asset. A. Disposal value B. Replacement value C. Fair market value D. Book value

B. Replacement value

Depreciation is based on which of the following assumptions? A. The period of utility of an asset is not fixed or determinable. B. The value of an asset declines in a predictable manner over the period of utility. C. The salvage value of an asset will not exist when the depreciation process is complete. D. The value of an asset is not fixed or determinable.

B. The value of an asset declines in a predictable manner over the period of utility.

Kevin has taken an apartment on lease for five years with a monthly rental of $3,500. At the end of five years, Kevin will be the legal owner of the apartment after an additional payment of $80,000. This type of lease is an example of a _____ lease. A. leveraged B. capital C. direct D. operating

B. capital

The _____ methods define utility as being the net cash inflows that the asset will produce. A. residual income valuation B. discounted cash flow valuation C. inventory valuation D. pre-money valuation

B. discounted cash flow valuation

A long-term rental in which ownership of the asset never passes to the person paying for the lease is called a(n) _____ lease. A. leveraged B. operating C. finance D. capital

B. operating

The _____ is the total cost of substituting an asset with an essentially identical asset. A. cost of disposition B. replacement cost C. cost of operating D. acquisition cost

B. replacement cost

A(n) _____ is an amount of inventory carried to ensure that a business will not run out of inventory because of fluctuating levels of sales. A. micro inventory B. safety stock C. just-in-time inventory D. perpetual inventory

B. safety stock

_____ is a process of communicating within or to an organization about how the outputs worked or were received. A. Productivity B. Valuation C. Feedback D. Operations

C. Feedback

Which of the following is a primary advantage of replacement value? A. Lower premiums on the policy B. Higher price of the new asset C. High accuracy of the value D. Lower price of the new asset

C. High accuracy of the value

Which of the following is the largest current asset that most manufacturing, wholesale, and retail firms generally have? A. Copyright B. Equipment C. Inventory D. Patent

C. Inventory

Which of the following is an advantage of providing credit to customers? A. It reduces the need to borrow money. B. It speeds up the receipt of cash. C. It reduces the cost of selling. D. It ensures all customers make on-time payments.

C. It reduces the cost of selling.

Which of the following is a disadvantage of renting capital assets? A. It does not protect a business from unexpected costs of repairs. B. It is not easily available. C. It requires the business to make regular, timely payments. D. It requires a major cash investment.

C. It requires the business to make regular, timely payments.

Which of the following goals need to be addressed for extending credit to customers? A. Getting as many customers as possible B. Arranging a loan and making regular payments of interest C. Keeping the number of bad accounts as low as possible D. Increasing the time between a credit sale and cash receipt

C. Keeping the number of bad accounts as low as possible

_____ refers to a type of periodic inventory that conducts a count of the entire inventory being held for sale at a specific point in time. A. Factoring B. Perpetual inventory C. Physical inventory D. Benchmarking

C. Physical inventory

_____ refers to the fixed and determinable value of an asset that will exist when the depreciation process is complete. A. Market value B. Book value C. Salvage value D. Disposal value

C. Salvage value

The primary advantage of the payback period is that: A. it calculates the amount required to attain a capital asset. B. it incorporates the time value of money. C. it allows easy comparisons of alternatives. D. it incorporates all cash flows that occur after the payback period.

C. it allows easy comparisons of alternatives.

The primary disadvantage of leasing is that: A. it is difficult to replace leased assets than it is to replace owned assets. B. the process of negotiating and closing a lease is very complicated. C. it usually costs more than it would cost to purchase an asset. D. the responsibility of disposing of obsolete assets lies on the lessee.

C. it usually costs more than it would cost to purchase an asset.

The practice of purchasing and accepting delivery of inventory only after it has been sold to the final customer is termed as _____. A. perpetual inventory B. point-of-sale system C. just-in-time inventory D. optimum stocking level

C. just-in-time inventory

The _____ is also called the reorder point. A. replacement value B. disposal value C. optimum stocking level D. economic order quantity

C. optimum stocking level

The capital budgeting equation used to measure the relationship between initial investment and the profits that are expected to be received from making the investment is called _____. A. rate of investment B. return on equity C. return on investment D. net present value

C. return on investment

An ideal situation is where a business receives new inventory just as the last unit of the previous order is sold. However, this rarely occurs because the: A. inventory level is not affected by demand. B. delivery times never fluctuate. C. sales volumes are not constant. D. estimate never exceeds demand.

C. sales volumes are not constant.

The sum of all costs of capital assets, including acquisition, ownership, operation, and disposal is called _____. A. acquisition cost B. cost of owning C. whole of life cost D. replacement cost

C. whole of life cost

Consider a product that costs $5 to make, and is sold for $15. What is the productivity ratio? A. 2:1 B. 1:1 C. 1:3 D. 3:1

D. 3:1

Which of the following is a benefit of leasing? A. It is usually much easier to replace owned assets than it is to replace leased assets. B. The cost of leasing an asset is less than the cost of purchasing it. C. There are no restrictions on the use, maintenance, and disposal of leased assets. D. An asset can be leased at a very low down payment.

D. An asset can be leased at a very low down payment.

_____ are assets that are expected to provide economic benefits for periods of time greater than one year. A. Accounts receivables B. Hard assets C. Contingent assets D. Capital assets

D. Capital assets

_____ refers to the process of deciding among various investment opportunities to create a specific spending plan. A. Factoring receivables B. Cash budgeting C. Inventory valuation D. Capital budgeting

D. Capital budgeting

_____ is an arbitrary, but regular and systematic, method used to take asset value as an expense for the purpose of calculating net income or loss. A. Inventory valuation B. Capital budgeting C. Benchmarking D. Depreciation

D. Depreciation

Which of the following is a statistical technique that determines the size of inventory that a business must hold to minimize total inventory cost? A. Benchmarking B. Factoring C. Pull-push strategy D. Economic order quantity

D. Economic order quantity

_____ refers to the machinery, tools, or materials used in the performance of the work of a business. A. Property B. Plant C. Inventory D. Equipment

D. Equipment

Which of the following is one of the advantages of the return on investment (ROI) analysis? A. The profits received are the same as cash. B. The calculations involved in this method are very difficult. C. It incorporates the time value of money. D. It relies on accounting information with which investors are comfortable.

D. It relies on accounting information with which investors are comfortable.

_____ is a general term for real estate, but it can also be applied as a legal term for anything owned or possessed. A. Equipment B. Plant C. Inventory D. Property

D. Property

The total cost of obtaining an asset, including such costs as purchase price, transportation, installation, testing, and calibrating in order to ready it for its first productive use is termed as _____. A. replacement cost B. cost of operating C. cost of disposition D. acquisition cost

D. acquisition cost

A just-in-time (JIT) inventory system attempts to reduce inventory levels to the absolute minimum by: A. purchasing and accepting inventory before it is sold to a customer. B. delaying the shipment of the completed product to the customer. C. keeping safety stock in case the estimate exceeds the demand. D. assembling the product in the absolute minimum time possible.

D. assembling the product in the absolute minimum time possible.

If a business offers its assets as collateral, lenders are most interested in the _____ value. A. book B. fair market C. replacement D. disposal

D. disposal

The primary disadvantage of the payback period is that: A. it incorporates all cash flows that occur after the payback period. B. it is highly complex. C. it does not allow the comparisons of alternatives. D. it disregards the time value of money.

D. it disregards the time value of money.

The process of transforming materials, labor, and energy into goods or services is termed as _____. A. feedback B. outflow C. benchmarking D. operations

D. operations

A system of recording the receipt and sale of each item as it occurs is called a _____. A. micro inventory B. periodic inventory C. just-in-time inventory D. perpetual inventory

D. perpetual inventory

Giving a third party legal rights to debts owed by the business in order to provide assurance that borrowed money will be repaid is called _____. A. operating leases B. factoring receivables C. capital leases D. pledging receivables

D. pledging receivables