If a Company Is Concerned with the Potential Negative Effects

question 207

Multiple Choice

If a company is concerned with the potential negative effects of establishing standards it should

• A) set loose standards that are easy to fulfill.
• B) offer wage incentives to those meeting standards.
• C) not employ any standards.
• D) set tight standards in order to motivate people.

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Definitions:

Salvage Value

The estimated residual value of an asset at the end of its useful life.

Cash Break-Even

The point at which a business's cash inflows equal its cash outflows, excluding financing or investment income.

Straight-Line Depreciation

An operation for dividing up the expense of a tangible asset throughout its active life in uniform annual totals.

Required Rate of Return

This refers to the minimum expected yield by investors to compensate for the risk of the investment.