A Strategy of Vertical Integration May Be a Risky Strategy

question 41

Multiple Choice

A strategy of vertical integration may be a risky strategy for a company to pursue when demand is:

• A) predictable.
• B) stable.
• C) unpredictable.
• D) steadily increasing.
• E) rapidly increasing.

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Definitions:

Percentage

A proportion or share in relation to a whole, represented as a number out of 100.

Receivables Basis

An accounting method that recognizes revenue when related receivables are actually or constructively received.

Allowance Account

A contra account related to accounts receivable that represents the estimate of receivables that are likely to be uncollectible.

Allowance Account

A contra-asset account used to estimate and offset losses from potentially uncollectible accounts receivable.