An Increasing Balance in the Inventory Account and a Faster

question 130

Multiple Choice

An increasing balance in the inventory account and a faster inventory turnover ratio would imply that the inventory build-up is occurring because:

• A)goods are not selling as fast as anticipated.
• B)the company is expecting to sell more in the future.
• C)goods are selling but it is taking longer to collect payment.
• D)the economy is slowing down.

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Definitions:

State Excise Tax

Taxes imposed by a state on particular goods or activities, such as alcohol, cigarettes, and gasoline.

Federal Excise Tax

A tax imposed by the federal government on the sale of certain goods and services, such as gasoline, alcohol, and tobacco.

Efficiency Loss

The loss of economic efficiency that can occur when the balance between supply and demand is not achieved or when market conditions lead to a misallocation of resources.

Marginal Benefit

The additional satisfaction or utility gained by consuming or producing one more unit of a good or service.