Sea Cruise Equipment Company Has Several Divisions That Are Investment

question 141

True/False

Sea Cruise Equipment Company has several divisions that are investment centers.Data for the Boat Division and the Trailer Division are shown here:
$$\begin{array} { | l | r | r | } \hline & \text { Boat Division } & \text { Trailer Division } \\\hline \text { Operating income } & \$ 70,000 & \$ 42,000 \\\hline \text { Total assets at Jan. 1 } & \$ 692,000 & \$ 233,000 \\\hline \text { Total assets at Dec. } 31 & \$ 700,000 & \$ 218,000 \\\hline\end{array}$$ With regard to the efficient use of assets,the Boat Division has a higher return on investment (ROI)because it has the highest operating income.

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Definitions:

Drawer

In financial contexts, the person who writes or issues a check or draft instructing a bank to pay a specified amount of money to a named party.

Drawee

The party upon whom a cheque, draft, or other negotiable instrument is drawn and who is responsible for its payment.

Maker

In financial terms, the party that promises to pay a certain amount of money in a promissory note or check.

Signature Liability

The legal responsibility that comes from the act of signing a document, indicating agreement or consent to its terms and conditions.