Which of the Following Statements Regarding Inventory Classifications Is Not

question 117

Multiple Choice

Which of the following statements regarding inventory classifications is not true?

• A)Inventory may include materials used in producing goods for sale.
• B)Companies that are manufacturers list their finished goods,work-in-process and raw materials inventory separately.
• C)Inventory is classified as a long-term asset on the balance sheet.
• D)Merchandisers buy inventory in finished form ready for resale.

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Definitions:

Monthly Interest Rate

The percentage of a sum of money charged for its use per month, often used in reference to loans or credit balances.

Accounts Receivable Balance

The aggregate sum of funds that customers owe a company for products or services that have been provided but remain unpaid.

Operating Cycle

The duration of time from the purchase of inventory to the collection of receivables from sales, outlining how long it takes for a company to turn investments in inventory into cash.

Safety Stocks

Additional quantities of stock kept in inventory to reduce the risk of stockouts caused by variations in supply or demand.