E&OE Wants to Minimize Inventory Costs as Far as Possible

question 38

Essay

E&OE wants to minimize inventory costs as far as possible. Explain one way by which it can achieve a near-zero inventory.

---

Definitions:

Trial Balance

A bookkeeping worksheet in which the balances of all ledgers are compiled into debit and credit account column totals that are equal, used to verify the accuracy of the bookkeeping system.

Debit

An accounting entry that increases an asset or expense account, or decreases an equity, liability, or revenue account.

Credit

An accounting entry representing an increase in assets or decrease in liabilities, and is also commonly used to refer to the provision of funds based on a trust agreement.

Transactions

The exchange of goods, services, or funds between two or more parties, forming the basis for recording in financial accounts.