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NEW QUESTION 39
Which of the following is required in order for an entity to record a provision?

• A. The exact payee must be known.
• B. It must be possible to determine a reliable estimate of the amount of the obligation.
• C. It must be reasonably possible that an outflow of resources will be required to settle the obligation.
• D. The exact date payable must be known.

Answer: B

Explanation:
A provision is a liability of uncertain timing and amount. Recognition of provisions is appropriate when the entity has a legal or constructive present obligation n-' 5ultinn from a past event called an obligating event), it is probable that an outflow of economic benefits will be necessary to settle the obligation, and its amount can be reliably estimated.

NEW QUESTION 40
Organizations mat adopt just-in-time purchasing systems often experience which of the following?

• A. A greater need for linkage with a vendor s computerized order entry system.
• B. A slight increase in carrying costs.
• C. A greater need for inspection of goods as the goods arrive.
• D. An increase in the number of suitable suppliers

Answer: A

NEW QUESTION 41
The estimated demand for pretzels at the next home football game using a deterministic approach based on the most likely outcome is:

• A. 4,000 pretzels.
• B. 6,000 pretzels.
• C. 4,400 pretzels.
• D. 5,000 pretzels.

Answer: D

Explanation:
A deterministic approach assumes that a value is known with certainty. If that value is deemed to be the most likely outcome, assumed demand will be 5,000 pretzels,

The volume with the highest probability 35%). A beverage stand can sell either soft drinks or coffee on any given day. If the stand sells soft drinks and the weather i= hot, it will make US $2,600; if the weather is cold, the profit will be US $1,000. If the stand sells coffee and the weather is hot, it will make US $1,900: if the weather is cold, the profit will be US $2,000. The probability of cold weather on a given day at this time is 60°l%.

NEW QUESTION 42
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