Mauldin Welding Shop Is Considering the Purchase of New High-Tech

question 117

Multiple Choice

Mauldin Welding Shop is considering the purchase of new high-tech welding equipment.If the equipment is purchased, Mauldin will incur $2,000 to install the equipment and pay a technician to adjust the computer settings.In determining the cash flows associated with the new equipment, the $2,000 is

• A)a cash outflow.
• B)a cash inflow.
• C)an opportunity cost.
• D)not relevant.

---

Definitions:

General Ledger

The primary ledger, when used in conjunction with subsidiary ledgers, that contains all of the balance sheet and income statement accounts.

Direct Materials

Raw materials that can be directly traced to the production of a specific product or service.

Work in Process

The total value of materials and labor for products that are partially completed but not yet ready for sale.

Materials

Raw inputs or basic substances used in the manufacturing or production process to create finished goods.