The Dollar Usage Volume of an Item Is How the Importance

question 10

True/False

The dollar usage volume of an item is how the importance of the item to inventory is measured in an ABC inventory system.

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Definitions:

Gross Investment

The total amount spent on purchasing or building new fixed assets and on replacing old assets, without deducting for depreciation.

Net Investment

The total amount spent on capital assets (like plant and equipment) minus depreciation, reflecting the actual increase in an entity's productive capacity.

Depreciation

The process of allocating the cost of tangible assets over their useful lives, reflecting the decrease in value of assets due to use, wear and tear, or obsolescence.

Implicit Cost

An indirect, non-payment expense represented by the opportunity cost of utilizing resources in a specific project instead of elsewhere.