Equipment Wears Out

question 40

Multiple Choice

Equipment wears out. Which of the following would be most likely to result in a decision to replace a piece of equipment instead of repairing it?

• A) It is 10 years old.
• B) It costs more than $1,000.
• C) The manufacturer no longer produces parts for repair.
• D) It is used for special tests or procedures about once a week.

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Definitions:

Financial Statements

Documents that provide an overview of a company's financial condition, including balance sheet, income statement, and cash flow statement.

Market-To-Book Value

A ratio comparing a company's current market price to its book value, used to evaluate whether a stock is over or undervalued.

Financial Statements

Are formal records of the financial activities and position of a business, person, or other entity, providing an overview of a company's financial condition in both short and long term.

Average Collection Period

The ratio of accounts receivable to daily sales. Also called days’ receivables.