When a Supplier Creates a Restrictive Agreement That Prohibits Intermediaries

question 57

Multiple Choice

When a supplier creates a restrictive agreement that prohibits intermediaries that handle its product from selling competing firms' products,_______________ has occurred.

• A)Just-in-time (JIT) inventory control system
• B)Materials requirement planning (MRP)
• C)Exclusive dealing
• D)Exclusive territory
• E)Tying contract

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Definitions:

GAAP

Generally Accepted Accounting Principles; a framework of accounting standards, rules, and procedures defined by the professional accounting industry in a specific country.

Capitalize

The process of recording an expenditure as an asset, rather than an expense, thereby spreading the cost over its useful life.

Bargain Purchase Option

A clause in a lease agreement that allows the lessee the option to purchase the leased asset at a price below its expected fair market value.

Executory Costs

Executory costs are the ongoing operating expenses in a lease agreement, such as insurance, maintenance, and property taxes, usually borne by the lessee.