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UARK Fugate Practice Questions Test 1 (Modules 1-4)
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The objective of Walmart's early network design strategy was to:
a) Place stores in "high potential" markets
b) Locate stores close to a Distribution Center
c) Locate stores close to Bentonville
d) Use supply chain savings to drive temporary price reductions
e) All of the above
b) Locate stores close to a Distribution Center
Which of the following is a theme throughout the course?
a) Supply chain management and logistics are not the same and are not even similar
b) How logistics and supply chain management can be used to create a competitive advantage
c) Logistics is just another term for transportation
d) Supply chain management is the same thing as logistics, but just a new term
b) How logistics and supply chain management can be used to create a competitive advantage
Supply chain management is the management of the _______ of business processes between functions in a firm and with suppliers and customers.
a) Integration
b) Instrumentation
c) Avoidance
d) Institutionalization
a) Integration
Logistics is the management of the flow and storage of inventory such that total cost is minimized and ____________ are achieved.
a) shipment goals
b) customer service targets
c) revenue goals
d) competitive interactions
b) customer service targets
A process is an ordered set of _____.
a) activities
b) silos
c) tasks
d) functions
a) activities
The term ____________________ today refers to a firm that supplies logistics and possibly other supply chain management services.
a) outsourcing
b) just-in-time (JIT)
c) supply base rationalization
d) third-party logistics (3PL) providers
d) third-party logistics (3PL) providers
Suppose a company orders 10 pallets of bottled water, 14 oz. per bottle, and $0.05 per bottle. There are 2,000 bottles per pallet. Suppose they use a truckload carrier and it costs a flat rate of $1,000 for the transportation. So the purchase cost is $0.05 per bottle X 2,000 bottles per pallet X 10 pallets = $1,000. So the purchase cost plus the transportation cost is $2,000, hence, the total cost per bottle is $2,000 / 20,000 bottles = $0.10 per bottle. In this example, the company only ordered 10 pallets but a truck load has a capacity of about 20 pallets of bottled water. Instead, suppose they ordered 20 pallets of bottled water, the transportation cost will be the same but the purchase cost will now be $0.05 per bottle X 2,000 bottles per pallet X 20 pallets = $2,000. Hence the purchase cost plus the transportation cost is $3,000, so the total cost per bottle is $3,000 / 40,000 bottles ≈ $0.08 per bottle (rounded up from $0.075 per bottle). This demonstrates which of the following concepts?
a) Economies of scope
b) Economies of scale
c) The supply chain management concept
d) The logistics concept
b) Economies of scale
Which of the following benefits did Walmart achieve from their early network design strategy?
a) Reduction in in-transit stock to the store
b) Lower cost per store for the DCs to serve the store
c) Reduction in transportation costs from the DCs to the store
d) All of these were benefit
e) Reduction in safety stock at the stores
d) All of these were benefits
What is a way to gain competitive advantage?
a) economies of scale
b) process improvement
c) process redesign
d) all of these
d) all of these
What "4-R" forces the need for the SC to hold extra inventory to deal with inventory/safety stock problems?
a) responsiveness
b) reliability
c) resilience
d) relationships
e) cost
b) relaibility
Responsiveness in the 4 R's of supply chain competition is defined as being able to _________________.
a) change logistics and supply chain management activities quickly
b) deliver products to customers that are demanding it
c) none of these
d) acknowledge problems quickly
a) change logistics and supply chain management activities quickly
Safety stock is _______________.
a) none of these
b) the expected number of units on hand just before a replenishment is received and available for use or sale
c) the coefficient of variation of the number of units on hand just before a replenishment is received and available for use or sale
d) the standard deviation of the number of units on hand just before a replenishment is received and available for use or sale
b) the expected number of units on hand just before a replenishment is received and available for use or sale
Product A: Standard Deviation of Sales = 25, Standard Deviation of Lead Time = 19
Product B: Standard Deviation of Sales = 29, Standard Deviation of Lead Time = 25
Product C: Standard Deviation of Sales = 15, Standard Deviation of Lead Time = 20
Product D: Standard Deviation of Sales = 25, Standard Deviation of Lead Time = 20
Which of the following products would you expect to require the most safety stock?
a) Product A
b) Product B
c) Product A or C
d) Product D
e) Product C
b) Product B
Which of the following are measures of reliability of a logistics process?
a) Standard deviation & Coefficient of variation
b) Mean
c) Median
d) Coefficient of variation
e) Standard deviation
a) Standard deviation & Coefficient of variation
MegaMart operates 365 days a year. Annual inventory turns of a popular product is 11. How many days of supply does that represent?
a) 92
b) 33
c) 63
d) 39
e) 57
b) 33
Average inventory last year was $100,000 and turns were 10. What was cost of goods sold last year?
a) None of these
b) $100,000
c) $1,000,000
d) $10,000,000
e) $10,000
c) $1,000,000
A distribution center has 50,000 cases of ketchup and the forecast is 1,000 cases per day. What is the estimate of the days of supply?
a) 100
b) 10
c) 50
d) 5
c) 50
The inventory holding cost factor is 30% and the average inventory next year is expected to be $200,000. What is the expected inventory holding cost?
a) $600,000
b) $6,500
c) $60,000
d) $66,766
e) Not enough information to determine
c) $60,000
Which of the following formulas calculate annual inventory turns?
a) Units sold in a year / average number of units in inventory
b) Units sold in a year / cost of goods sold
c) None of these
d) Cost of goods sold * value of inventory
a) Units sold in a year / average number of units in inventory
_____________ is the idea that there are many other costs than just the acquisition cost that should be accounted for in a purchase.
a) Sum of irrelevant costs
b) Supply chain optimal cost
c) Total cost of ownership
d) Landed cost of logistics
c) Total cost of ownership
The ___________ component of customer service includes common metrics of customer service such as percentage of items in stock, percentage of time an item is in stock, fill rate, lead time, et cetera.
a) transaction
b) post-transaction
c) mid-transaction
d) pre-transaction
a) transaction
A leveling of production costs between China, Mexico, and the United States means that U.S. firms will increasingly focus on _____________ to be competitive.
a) none of these
b) agility
c) flexibility
d) all of these
e) responsiveness
d) all of these
Which of the following is true of the item fill rate?
a) The item fill rate is the number of units of demand fulfilled from inventory divided by the total amount of demand.
b) All of these are true
c) Two different SKUs can have the same PTIS and yet have different IFRs.
d) Item fill rate (IFR) is the percentage of demand fulfilled from on-hand inventory.
e) Two different SKUs can have the same IFRs and yet have different PTIS.
b) All of these are true
If store perpetual inventory is greater than zero for 37 of the 100 SKUs in a category, then
a) the calculated percentage of items in stock is 63% (assuming perpetual inventory is accurate)
b) the calculated item fill rate is 63% (assuming perpetual inventory is accurate)
c) the calculated percentage of items in stock is 37% (assuming perpetual inventory is accurate)
d) the calculated percentage of time in stock is 63% (assuming perpetual inventory is accurate)
e) the calculated item fill rate is 37% (assuming perpetual inventory is accurate)
c) the calculated percentage of items in stock is 37% (assuming perpetual inventory is accurate)
If store perpetual inventory is greater than zero for 65 days of the 100 days checked for a particular item in a category, then
a) the calculated item fill rate is 35% (assuming perpetual inventory is accurate)
b) the calculated item fill rate is 65% (assuming perpetual inventory is accurate)
c) the calculated percentage of time in stock is 65% (assuming perpetual inventory is accurate)
d) the calculated percentage of items is 35% (assuming perpetual inventory is accurate)
e)the calculated percentage of time in stock is 35% (assuming perpetual inventory is accurate)
c) the calculated percentage of time in stock is 65% (assuming perpetual inventory is accurate)
Assume an item has a demand of 1 per day and a demand of 6 every 4th day. However, the item is out of stock every 4th day. What would be the item fill rate (IFR).
a) 33%
b) 40%
c) 67%
d) 43%
a) 33%
Perpetual inventory is one of the major ways that ____________________ and percentage of items in stock are measured.
a) standard deviation
b) none of these
c) percentage of time in stock
d) item fill rate
c) percentage of time in stock
When a shopper in a retail store encounters an out-of-stock, there are a number of reactions that are possible. Which of the following are options discussed in this lesson?
A) None of these are options
B) Switch to another brand
C) Switch to another size, flavor, or type, within the same brand
D) Switch to another category but same product type
E) All of these are options
E) All of these are options
One approach to estimating the cost of a stockout per unit of lost sale is to calculate an estimate of the ____________.
A) internal rate of return
B) probability
C) net present value
D) None of these
E) expected value
E) expected value
Imagine a customer is looking for a giant specialty candy bar in a store but it is not on the shelf. Suppose that the retail margin on the candy bar is $4.50 and that 27% of the customers forgo having the candy bar but the other 73% switch to another brand. Suppose that the margin the retailer makes on this brand is also $4.50 per unit. Then the cost of a stockout per unit of lost sale to the retailer is ____.
A) $4.50
B) $1.22
C) $3.00
D) $3.28
B) $1.22
Retail shelf is very expensive because ___________:
A) the land is expensive
B) it takes lots of time to put products on the shelf.
C) the shelf is expensive
D) the opportunity cost of alternate products
D) the opportunity cost of alternate products
Imagine you are a small format grocer and that on average you sell 70 potatoes per day. Some days you sell more and some days you sell less, but on average you sell 70. In fact, you have been doing this for a while and have calculated the probability of selling different quantities of potatoes, reproduced in the table of discrete probabilities below.
Quantity Sold Probability
54 0.10
62 0.20
70 0.40
78 0.20
86 0.10
You have decided to stock fewer potatoes and instead stock more onions. You decided to stock 78 potatoes each day. About how many sales of potatoes do you expect to lose each day as a result of this decision to stock more onions?
A) 0.80
B) 0.20
C) 0.60
D) 1.60
A) 0.80
You only need two parameters to define a normal distribution; the mean and_____________
A) none of these
B) the mode
C) the standard deviation
D) the average
C) the standard deviation
For the normal distribution, about __________ of the observations are within +/- 1 standard deviation of the mean, 95% within +/- 2 standard deviations, and about 99% within +/- 3 standard deviations.
A) 84%
B) 86%
C) None of these
D) 83%
E) 85%
C) None of these
You want to compute an optimal service level for stocking inventory. The correct formula is:
A) Neither of these are correct.
B) The cost of having too much, divided by the sum of the cost of having too much and the cost of not having enough.
C) The cost of not having enough per unit, divided by the sum of the cost of having too much and the cost of not having enough.
D) Either of these will do.
C) The cost of not having enough per unit, divided by the sum of the cost of having too much and the cost of not having enough.
A store manager says: "I shoot for a 95% service level." What the manager means is that:
A) When the customer wants a product, she wants it to be there at least 95% of the time.
B) She wants 95% of customers to have a pleasant experience in the store.
C) None of these are correct.
D) She wants no more than 5% of products to be returned to the store.
E) All of these are correct
A) When the customer wants a product, she wants it to be there at least 95% of the time.
Carol's Bakery bakes sweet rolls for 210 local supermarkets and sells them through the supermarkets on a consignment basis, which means she only gets paid for the sweet rolls that sell. She destroys sweet rolls that don't sell. People in this city love her sweet rolls. The total delivered cost of sweet rolls is $ 1.05 per unit and she sells it to retailers for $8.00. Given this information, calculate the optimal service level.
A) 90%
B) 83%
C) 87%
D) 85%
C) 87%
David's Bakery bakes cinnamon rolls for 90 local supermarkets and sells them through the supermarkets on a consignment basis, which means he only gets paid for the cinnamon rolls that sell. He destroys cinnamon rolls that don't sell. People in this city love his cinnamon rolls. He estimates a daily demand of 8,000 cinnamon rolls with a standard deviation of 800 cinnamon rolls. Suppose he wants to achieve a service level of 81%. How many cinnamon rolls should he produce? Hint: Use the Excel function NORMINV(service level, mean, standard deviation).
A) 8,702
B) 8,502
C) 8,902
D) 9,102
A) 8,702
William's Bakery bakes sweet rolls for 80 local supermarkets and sells them through the supermarkets on a consignment basis, which means he only gets paid for the sweet rolls that sell. He destroys sweet rolls that don't sell. People in this city love his sweet rolls He estimates a daily demand of 7,000 sweet rolls with a standard deviation of 700 sweet rolls. Suppose he produces 7,589 sweet rolls. Using the Excel formula NORMDIST (level of production, mean, standard deviation, 1), calculate the expected service level or percentage time in stock.
A) 85%
B) 75%
C) 80%
D) 77%
C) 80%
When we generate more profit with fewer assets, ROA will be
A) Up
B) About the same
C) Equal
D) Down
A) Up
The secondary effect of an increase in inventory may be an increase in ROA if the increase in inventory causes an increase in sales and profit. The increase in the sales and profit could be a result of which of the following?
A) Fewer stockouts
B) Fewer lost sales
C) Increase in sales of impulse items with inventory dependent demand
D) All of these
D) All of these
Fill rate is the % of __________ from on hand inventory.
A) demand fulfilled
B) losses
C) profit
D) stock outs
A) demand fulfilled
One of the direct effects of an increase in transportation cost is to reduce _____.
A) GMROI
B) stock outs
C) ROA
D) fill rate
C) ROA
One can increase the inbound transportation cost and reduce the outbound transportation cost by_______ the number of distribution centers.
A) modulating
B) decreasing
C) equalizing
D) increasing
D) increasing
GMROI _________________________
A) all of these
B) none of these
C) measures the performance of inventory
D) includes gross margin in the calculation
E) is the Gross Margin Return on Inventory Investment
A) all of these
Unit sales divided by average inventory is called ______.
A) inventory turns
B) Stock outs
C) GMROI
D) ROA
A) inventory turns
If you wanted to assess inventory turns of a category with multiple SKUs, the best way to do that would be to ________________:
A) just take the average of the inventory turns for the SKUs in the category.
B) just take the sum of the inventory turns for the SKUs in the category.
C) average the sales for the category and divide by the average inventory level for the category.
D) add up the unit sales for the category and divide by the total inventory level for the category.
D) add up the unit sales for the category and divide by the total inventory level for the category.
Consider the following analysis for four SKUs in a product category. Which is the best estimate of the turns of the category as a whole?
SKU Annual Sales Average Inventory Inventory Turns
SKU 1 1,200 90 13.33
SKU 2 18,800 12,000 1.57
SKU 3 18,800 12,000 1.57
SKU 4 18,800 12,000 1.57
57,600 36,090
A) 6.38
B) 4.51
C) 1.60
D) 18.04
C) 1.60
When calculating inventory turns, it is acceptable to use _______________ in the numerator and __________ in the denominator.
A) Unit Sales; Average Unit Inventory
B) Cost of Goods Sold; Average Inventory Cost
C) Sales; Cost of Goods Sold
D) Unit Sales; Average Unit Inventory & Cost of Goods Sold; Average Inventory Cost
E) all of these
D) Unit Sales; Average Unit Inventory & Cost of Goods Sold; Average Inventory Cost
Which of the following metrics can be used in evaluating SKU inventory performance?
A) Inventory turns
B) GMROI
C) Periods of supply
D) all of the above
D) all of the above
Which of the following metrics tells you how many periods it will take to sell through your inventory on hand?
A) Inventory turns
B) GMROI
C) Periods of supply
D) all of these should be used
C) Periods of supply
Logistics lead time is the time ________________.
A) from when an order is placed until it's actually received and ready for use or sale
B) that a customer is willing to wait for delivery of an anticipated purchase
C) from when an order is manufactured until it's in the customer's hands
D) all of the these
A) from when an order is placed until it's actually received and ready for use or sale
As supply chains become longer, supply uncertainty _____________.
A) increases
B) decreases
C) levels out
D) become irrelevant
E) a & d
A) increases
As the planning horizon increases, forecast error is expected to ________________.
A) increase
B) be about the same
C) decrease
D) go towards zero
A) increase
Which is a component of logistics lead time?
I. Customers order cycle time
II. Procurement time
III. Manufacturing time & delivery time
A) I and II
B) III only
C) II and III
D) I only
C) II and III
The lead time gap is defined as the difference between ________ and the customer's order cycle.
A) the logistics lead time
B) the procurement lead time and
C) the manufacturing lead time
D) the delivery lead time
A) the logistics lead time
Which component of demand represents the degree to which the data is increasing or decreasing over time?
A) Level
B) Trend
C) Cyclicality
D) Seasonality
B) Trend
Noise is random variation in demand that ______.
A) are explained by seasonality
B) cannot by explained
C) can be explained
D) are explained by trend
B) cannot by explained
When there is too much noise in the data, the only component of demand that can be estimated is the_______ of demand.
A) cyclicality
B) level
C) trend
D) seasonality
B) level
In pantry loading, the rate of consumption is ______, but the frequency of purchase is reduced
A) more
B) less
C) the same
D) none of the above
C) the same
In general, forecasters must consider which of the following?
A) trend
B) seasonality
C) noise
D) promotional activity
E) all of the above
E) all of the above
Market research is a _________ kind of forecasting method.
A) qualitative
B) causal
C) time series
D) quantitative
A) qualitative
The Delphi method is a(n) ______ method of forecasting.
A) iterative
B) quantitative
C) causal
D) non iterative
A) iterative
Time series forecasting approaches are primarily ___________ methods.
A) intuitive
B) causal
C) qualitative
D) quantitative
D) quantitative
Causal models might best be used for ______ forecasting while time series model are mostly used for ________ forecasting.
A) long term; long term
B) long term; short term
C) short term; Long term
D) short term, short term
B) long term; short term
Policy capturing or judgment capturing are subjective ways of using ______ methods to extract __________ models.
A) qualitative, quantitative
B) quantitative; qualitative
C) qualitative, qualitative
D) quantitative; quantitative
A) qualitative, quantitative
One of the simplest time series models used for forecasting is ____________.
A) moving average
B) Exponential smoothing
C) weighted moving average
D) Trend adjusted exponential smoothing
A) moving average
Julie is estimating demand for a future period using a time series model. She sums the demand for the past three periods and then divides that sum by 3. Julie is using the ___________ method.
A) weighted moving average
B) Causal
C) exponential smoothing
D) moving average
D) moving average
As the number of periods included in a moving average forecast model increases, the forecast becomes ________________ stable.
A) Equally
B) More
C) Less
B) More
Given a sample of weekly sales data of 8, 10, 8, and 10, what is the four-period moving average sales forecast for the next week?
A) 9
B) 36
C) 8
D) 10
A) 9
To make a weighted moving average forecast model less responsive, the forecaster should _____________________.
A) use a lower alpha
B) increase the number of periods included
C) place higher weight on more recent periods
D) decrease the number of periods included
B) increase the number of periods included
Adjusting last period's forecast by a fraction of last period's forecast error is called _______.
A) Moving average
B) exponential smoothing
C) Mean Square Error
D) Mean Forecast Error
B) exponential smoothing
In an exponential smoothing model, alpha can take on any value between ______.
A) -1 and 1
B) 0 and 1
C) -1 and 0
D) 0 and 10
B) 0 and 1
As alpha is increased in an exponential smoothing model, the forecast becomes more ______.
A) reactive
B) stable
C) random
D) accurate
A) reactive
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Verified questions
ACCOUNTING
Top managers of O’Hare Products, Inc., have asked for your help in comparing the company’s profit performance and financial position with the average for the industry. The accountant has given you the company’s income statement and balance sheet and also the following data for the industry: O’Hare Products, Inc. Income Statement Compared with Industry Average Year Ended December 31, 2012 $$ \begin{matrix} \quad & \text{O’Hare} & \text{Industry Average}\\ \text{Net sales } & \text{\$960,000 } & \text{100.0\\% }\\ \text{Cost of goods sold } & \text{662,400 } & \text{57.3 }\\ \text{Gross profit } & \text{297,600 } & \text{42.7 }\\ \text{Operating expenses } & \text{220,800 } & \text{29.4 }\\ \text{Operating income } & \text{76,800 } & \text{13.3 }\\ \text{Other expenses} & \text{9,600 } & \text{2.5 }\\ \text{Net income } & \text{\$ 67,200} & \text{10.8\\%}\\ \end{matrix} $$ O’Hare Products, Inc. Balance Sheet Compared with Industry Average December 31, 2012 $$ \begin{matrix} \quad & \text{O’Hare} & \text{Industry Average}\\ \text{Current assets } & \text{\$292,000 } & \text{72.1\\% }\\ \text{Fixed assets, net} & \text{72,800 } & \text{19.0 }\\ \text{Intangible assets, net } & \text{14,000 } & \text{4.8 }\\ \text{Other assets } & \text{21,200 } & \text{4.1 }\\ \text{Total} & \text{\$400,000} & \text{100.0\\%}\\ \text{Current liabilities } & \text{\$188,000 } & \text{47.2\\% }\\ \text{Long-term liabilities } & \text{84,000 } & \text{21.0 }\\ \text{Stockholders’ equity } & \text{128,000 } & \text{31.8 }\\ \text{Total} & \text{\$400,000} & \text{100.0\\%}\\ \end{matrix} $$ Prepare a common-size income statement and balance sheet for O’Hare Products. The first column of each statement should present O’Hare Products’ common-size statement, and the second column should show the industry averages. For the profitability analysis, compare O’Hare Products’ (a) ratio of gross profit to net sales, (b) ratio of operating income to net sales, and (c) ratio of net income to net sales with the industry averages. Is O’Hare Products’ profit performance better or worse than the average for the industry? For the analysis of financial position, compute O’Hare Products’ (a) ratios of current assets and current liabilities to total assets and (b) ratio of stockholders’ equity to total assets. Compare these ratios with the industry averages. Is O’Hare Products’ financial position better or worse than the average for the industry?
ACCOUNTING
Metal Shelf Company’s standard cost for raw materials is $4.00 per pound and it is expected that each metal shelf uses two pounds of material. During October Year 2, 25,000 pounds of materials are purchased from a new supplier for$97,000 and 13,000 shelves are produced using 27,000 pounds of materials. Which statement is a possible explanation concerning the direct materials variances? a. The production department had to use more materials since the quality of the materials was inferior. b. The purchasing manager paid more than expected for materials. c. Production workers were more efficient than anticipated. d. The overall materials variance is positive; no further analysis is necessary.
ACCOUNTING
If a partner invests a noncash asset in the partnership, the amount to be debited and credited would be a. the asset’s cost. b. the asset’s book value. c. the asset’s current market value. d. an amount determined by the investing partner
ACCOUNTING
Prepare the necessary adjusting entries at December 31, 2016, for the Falwell Company for each of the following situations. Assume that no financial statements were prepared during the year and no adjusting entries were recorded. 1. A three-year fire insurance policy was purchased on July 1, 2016, for $12,000. The company debited insurance expense for the entire amount. 2. Depreciation on equipment totaled$15,000 for the year. 3. Employee salaries of $18,000 for the month of December will be paid in early January 2017. 4. On November 1, 2016, the company borrowed$200,000 from a bank. The note requires principal and interest at 12% to be paid on April 30, 2017. 5. On December 1, 2016, the company received $3,000 in cash from another company that is renting office space in Falwell’s building. The payment, representing rent for December and January, was credited to deferred rent revenue.
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