Terrell Is Trying to Decide Whether to Concentrate His Purchases

question 132

Multiple Choice

Terrell is trying to decide whether to concentrate his purchases with one supplier or diversify with two or three.One factor in favour of a single supplier is:

• A)insurance against interruptions caused by strikes.
• B)a particular supplier's superiority in product quality.
• C)knowing the customer's loyalty, the supplier may provide better prices and service.
• D)locating the best source in terms of price, quality and service with each purchase.

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Definitions:

Economic Benefits

The gains received or receivable by an entity as a result of past or future transactions or events.

Asset

A present economic resource controlled by the entity as a result of past events. An economic resource is a right that has the potential to produce economic benefits.

Control

The power to influence or direct the behavior of people or the course of events.

Conceptual Framework

An underlying structure in accounting that guides the development of standards and the preparation of financial statements.