Ch 15 ENTRE

________ is the series of steps and activities required to complete a process.

a procedure

When determining the cost of a capital asset, the ________ is the sum of everything that you spend to obtain and prepare the asset for its first productive use.

acquisition cost

A just-in-time (JIT) inventory system attempts to reduce inventory levels to the absolute minimum by

assembling the product in the absolute minimum time possible

A ________ describes the difference between the original acquisition cost of capital assets and the amount of depreciation expense that has been recognized to date.

book value

________ are assets that are expected to provide economic benefits for periods of time greater than one year.

capital assets

________ refers to the process of deciding among various investment opportunities to create a specific spending plan.

capital budgeting

________ refers to the machinery, tools, or materials used in the performance of the work of a business.

equipment

Selling the rights to collect accounts receivable to an entity outside the business is called

factoring

The primary disadvantage of the payback period is that

it disregards the time value of money and disregards all cashflows that occur after the payback period

Which of the following is not an advantage for providing credit to customers?

it reduces the cost of selling

The most commonly outsourced functions of small businesses are

legal and accounting

The process of transforming materials, labor, and energy into goods or services is termed as ________. (table)

operations

________ refers to the fixed and determinable value of an asset that will exist when the depreciation process is complete.

salvage value

Which of the following is a disadvantage of renting capital assets? (table)

(1) it requires the business to make regular, timely payments (2) no ownership (3) more expensive than owning

Which of the following is not a benefit of correctly documenting your business processes?

-There should be less waste and scrap in your processes. -There should be fewer employee mistakes. -The process is self-sufficient and does not require much time to review or update. -Extensive documentation will make selling your business much easier.

Which of the following is one of the disadvantages of the return on investment (ROI) analysis?

the profits received are not the same as cash and ignores time value of money

To meet the high production demand, Jack Wilson—the owner of JG Sawmills—needs to invest in a frame saw. He has narrowed down to two choices: a double cut frame CZ84 saw with chipper and a HY-200 saw with double arbor bearings. The cost of CZ84 will be $91,000, whereas the cost of HY-200 will be $110,000. The salvage value of each type is $0 (zero) and both will have a useful life of 4 years. The primary disadvantage of leasing is that:

usually costs more than purchasing and leased assets are subject to numerous restrictions

________ 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.

physical 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

pledging receivables

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

sales volumes are not constant