Which of the following is a key to successful total quality management?

• A.Training quality inspectors.
• B.Focusing intensely on the customer.
• C.Creating appropriate hierarchies to increase efficiency.
• D.Establishing a well-defined quality standard, then focusing on meeting it.

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Whenever an entity must use net realizable value rather than cost to value an inventory
item, the inventory account is reduced and the account "expense due to decline of inventory to net realizable value" is increased. The balance of this account is reflected as a separate item on the:

• A.Balance sheet as a deduction from inventory.
• B.Income statement as an extraordinary loss.
• C.Income statement as a deduction from gross profit on sales.
• D.Income statement as an operating expense.

Correct Answer: C

If a separate expense account is not used, the ending inventory will be reduced directly and the result will be an increase in cost of goods sold. No separate disclosure of the inventory write down will appear in the income statement. The effect is to hide the loss in cost of goods sold. If the separate expense account is used, it appears on the income statement as a deduction from gross profit sales - cost of goods sold). One advantage is that cost of goods sold is not misstated. At the end of the accounting period, an entity has the partially completed financial statements shown as follows.

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Which of the following is a disadvantage of selecting a commercial software package rather than developing an application internally?

• A.Employee resistance to change.
• B.Incompatibility with client/server technology.
• C.Inadequate technical support.
• D.Lack of flexibility.

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Assume that the average collection period is 25 days. After the credit policy is well established, what is the expected average accounts receivable balance for the entity at any moment in time, assuming a 365-day year?

• A.US $684.93
• B.US $1,808.22
• C.US $27,123.30
• D.US $45,205.48

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In terms of international business strategy, which of the following is true regarding a multi-domestic strategy?

• A.It provides cost advantages, improves coordinated activities, and speeds product development.
• B.It centralizes control with little decision-making authority given to the local level.
• C.It uses the same products in all countries.
• D.It is an effective strategy when large differences exist between countries.

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