Jacob and Molly Decide to Start a New Cake-Decorating Business

question 144

Multiple Choice

Jacob and Molly decide to start a new cake-decorating business. They each contribute $10,000 to get the business off the ground. This money is considered

• A) sales revenue.
• B) long-term debt.
• C) equity capital.
• D) short-term financing.
• E) cash flow.

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Definitions:

Ordering Cost

The expenses incurred in placing and processing orders to suppliers.

EOQ Model

Economic Order Quantity Model, an inventory management formula that determines the optimal order size to minimize the sum of ordering, carrying, and stockout costs.

Inventory Management

The practice of overseeing and controlling the ordering, storage, and use of components or finished goods held in stock.

Inventory Carrying Charge

The total cost associated with holding inventory in stock, including storage, insurance, taxes, depreciation, and opportunity costs.