Holding Low Levels of Inventory Results in ___________ Inventory Carrying

question 22

Multiple Choice

Holding low levels of inventory results in ___________ inventory carrying costs and ___________ stockout costs.

• A)high; high
• B)high; low
• C)low; high
• D)low; low

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Definitions:

Reported Earnings

The income stated in a company's financial statements, reflecting the company's performance over a specified period, typically a fiscal quarter or year.

Contra-Asset Account

A contra-asset account is an account used in a company's balance sheet to offset the balance of an associated asset account, reducing the net amount of both accounts.

Sales Returns

Transactions where customers return previously purchased merchandise, resulting in a subtraction from a business's gross sales.

Net Realizable Value

The amount of cash expected to be received from the sale of inventory, after deducting the costs necessary to make the sale.