One Way for a Business Buyer to Avoid Being Surprised

question 30

True/False

One way for a business buyer to avoid being surprised by liens against the assets purchased is to include a clause in the sales contract stating that any liability not shown on the balance sheet at the time of the sale remains the responsibility of the seller.

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Definitions:

Setup Cost

The expenses incurred to prepare equipment or a production process for manufacturing a new batch of products, including costs for labor, tools, and materials.

Inventory Holding Cost

Expenses associated with storing unsold goods, including warehousing, insurance, spoilage, and opportunity costs, essentially another term for carrying cost.

Bill of Materials

An all-inclusive inventory detailing the materials, parts, and instructions necessary for the creation, production, or fixing of a product or service.

On-Hand Inventory

The quantity of stock physically available in a warehouse or storage area, ready for sale or distribution.