Which of the Following Is FALSE with Regard to the Make

question 11

Multiple Choice

Which of the following is FALSE with regard to the make or buy option?

• A)The advantage of outsourcing activities that do not directly contribute to the company's bottom line reduces production costs.
• B)The advantage of outsourcing activities that do not directly contribute to the company's bottom line reduces capital investment.
• C)The advantage of outsourcing is the opportunity for the primary firm to avoid responsibility for product failure due to outsourced production.
• D)The disadvantage of outsourcing is possible loss of control over the outsourced production of the work that has been outsourced.

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Definitions:

Revenue Account Balance

The total amount of income generated from sales before any expenses are subtracted.

Expense Account Balance

The total amount recorded as expenditures by a company within a specific period, awaiting reimbursement or allocation.

Income Summary

A temporary account used in accounting to transfer revenues and expenses, summarizing the net income or loss for a period before transferring the balance to retained earnings.

Owner's Capital

The amount of equity in a company that is directly attributable to the owner(s), representing their stake in the company’s assets after liabilities have been subtracted.