When Evaluating the Assets of an Existing Business, the Inventory

question 62

Multiple Choice

When evaluating the assets of an existing business, the inventory ________.

• A)is always current and salable
• B)usually appreciates over time, making the business a bargain
• C)should be judged on the basis of its market value, not its book value
• D)is usually stated honestly and does not need an independent audit

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Definitions:

Short Run

In economics, a period during which at least one of a firm's inputs is fixed, limiting the firm's capacity to adjust to changes in demand.

Economic Profit

The total revenue minus explicit and implicit costs, representing the additional gain beyond breaking even.

Weekly

Pertaining to, happening once every week or pertaining to a week.

Market Price

The price of a good or service determined by the supply and demand conditions in a competitive marketplace, reflecting what consumers are willing to pay and sellers accept.