Each of the Following Is a Disadvantage of Buying Rather

question 181

Multiple Choice

Each of the following is a disadvantage of buying rather than making a component of a company's product except that

• A) quality control specifications may not be met.
• B) the outside supplier could increase prices significantly in the future.
• C) profitable product lines may be dropped.
• D) the supplier may not deliver on time.

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Definitions:

Dividend Reinvestment Scheme

A plan offered by a corporation that allows investors to reinvest their cash dividends by purchasing additional shares or fractional shares on the dividend payment date.

Cash Equivalents

Short-term, highly liquid investments that are readily convertible to known amounts of cash and close to their maturity.

Basis of Measurement

The specific basis chosen to measure various types of assets, liabilities, income, and expenses, such as historical cost, fair value, and amortized cost.

Accrual

An accounting method that records revenues and expenses when they are incurred, regardless of when cash transactions occur.