Which One of the Following Statements Regarding Inventory Is Not

question 85

Multiple Choice

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

• A)An increase in inventory levels is always a sign of inefficiency in inventory management.
• B)The measurement of inventory affects both the balance sheet and the income statement within an accounting period.
• C)The ending inventory of one accounting period becomes the beginning inventory of the next accounting period.
• D)The cost of merchandise can vary over time and may be affected by weather,politics,and technological innovation.

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Definitions:

Corporate Net Income

The amount of profit a company has earned during a specific period after all expenses, taxes, and costs have been subtracted from total revenue.

Proportionate Share

A portion or percentage of an entity or amount that corresponds to an individual's part in the whole.

FMV

Fair Market Value (FMV) is the estimated price at which an asset would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and both having reasonable knowledge of relevant facts.

Basis

The amount paid for an asset, used to calculate gain or loss for tax purposes.