A Firm That Chooses Strategy B, as Portrayed in Chapter

question 35

Multiple Choice

A firm that chooses Strategy B, as portrayed in Chapter 29, should plan to

• A)maintain a high ratio of current assets to sales.
• B)use low or no short-term debt and more long-term financing.
• C)repurchase a substantial number of shares.
• D)be a short-term lender during a part of the year and a borrower during the rest.

---

Definitions:

Job Order Cost System

An accounting method that assigns costs to specific production batches or jobs, trackable by individual orders.

General Cost System

An accounting system that is used to track and allocate the general expenses of a company.

Process Cost System

An accounting system used to accumulate costs in industries where a homogeneous product is produced continuously in a mass production environment.

Predetermined Overhead Rate

A rate used to assign manufacturing overhead costs to products or job orders, calculated before the costs are incurred, based on estimated overhead and activity levels.