Chap016 - Chapter 16 Assets Inventory and Operations Management Chapter 16 Assets Inventory and Operations Management True False Questions 1(p 518

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Chapter 16 - Assets: Inventory and Operations Management Chapter 16 Assets: Inventory and Operations Management True / False Questions 1. (p. 518) Given the high interest rate charges, current practice is for small businesses to provide direct credit to customers. FALSE Difficulty: Hard 2. (p. 519) Providing customer credit usually results in increased sales revenues and lowered transaction costs. TRUE Difficulty: Hard 3. (p. 519) One of the policies for managing customer credit requires business owners to maintain constant "aging" of accounts to quickly identify customers who become delinquent. TRUE Difficulty: Medium 4. (p. 520) When you factor receivables, you get about 50 percent of the amount due, where as, when you pledge receivables, you immediately get 75 to 80 percent of the amount due. FALSE Difficulty: Hard 16-1
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Chapter 16 - Assets: Inventory and Operations Management 5. (p. 521) Accounts receivable are the largest current asset that most manufacturing, wholesale and retail firms have. FALSE Difficulty: Medium 16-2
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Chapter 16 - Assets: Inventory and Operations Management 6. (p. 521) The total cost of keeping inventory is the sum of the cost of buying it, the cost of keeping it on hand and the cost of ordering more. TRUE Difficulty: Medium 7. (p. 521) EOQ is also known as the reorder point. FALSE Difficulty: Easy 8. (p. 523) The cost of owning and holding inventory is far greater than the cost of ordering inventory. TRUE Difficulty: Easy 9. (p. 523) The ultimate extension of pull-though processing is just-in-time inventory management. TRUE Difficulty: Medium 10. (p. 524) Given the high cost of keeping and counting inventory, most small businesses use the perpetual inventory method. FALSE Difficulty: Medium 16-3
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Chapter 16 - Assets: Inventory and Operations Management 11. (p. 524) The main drawback of using periodic inventory systems is the high cost in time needed for constant record keeping. FALSE Difficulty: Medium 12. (p. 526) In the POS systems, every sale is immediately recorded in the accounting system. TRUE Difficulty: Medium 13. (p. 526) The value of operating assets is a function of their utility. TRUE Difficulty: Medium 14. (p. 527) Replacement value is an accounting term that describes the difference between the original acquisition cost of capital assets and the amount of depreciation expense that has been recognized for them. FALSE Difficulty: Medium 15. (p. 527) The primary advantage of replacement value is that you can be quite confident of its accuracy. TRUE Difficulty: Easy 16-4
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Chapter 16 - Assets: Inventory and Operations Management 16. (p. 527) Potential buyers and investors are most interested in the book value of the asset since it represents the real cost of that asset. FALSE
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This note was uploaded on 11/21/2009 for the course MNGT 422X taught by Professor Godsey during the Spring '09 term at UNL.

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Chap016 - Chapter 16 Assets Inventory and Operations Management Chapter 16 Assets Inventory and Operations Management True False Questions 1(p 518

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