The Theory of Constraints Was Developed by Eli Goldratt to

question 103

Multiple Choice

The Theory of Constraints was developed by Eli Goldratt to

• A)maximize the performance of a value chain by focusing on constraints that limit an organization's output.
• B)maximize the performance of a value chain by focusing on those processes that do not have constraints.
• C)limit or eliminate defective products that constrain production.
• D)maximize revenues in terms of output.

---

Definitions:

Net Sales

The revenue a company earns from sales after subtracting returns, allowances for damaged or missing products, and discounts.

Allowance for Doubtful Accounts

A contra-asset account used to estimate the portion of accounts receivable that is expected to be uncollectible.

Percentage of Credit Sales Method

An accounting method used to estimate bad debt expense by applying a fixed percentage to the total credit sales of a period.

Credit Sales

Sales made by a business on credit, where payment is collected at a later date.