The Inventory System That Classifies Items Based on the Total

question 28

Multiple Choice

The inventory system that classifies items based on the total dollar volume of sales that each item generates is known as which of the following?

• A) Economic order quantity
• B) ABC classification
• C) Electronic data interchange
• D) Reorder point and quantity

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Definitions:

Periodic System

An inventory system where inventory records are updated at specific intervals, as opposed to continuously.

Cost of Goods Sold

Cost of Goods Sold (COGS) refers to the direct costs attributable to the production of the goods sold by a company.

IFRS

International Financial Reporting Standards, which are a set of accounting standards developed by the International Accounting Standards Board (IASB) that guide the preparation of financial statements globally.

Inventories

Items held for sale in the ordinary course of business, as well as materials and components intended for use in the production process.