In the Context of Inventories, Which of the Following Is

question 69

Multiple Choice

In the context of inventories, which of the following is a similarity between a manufacturing firm and a retail firm?

• A) Both hold inventories of finished goods.
• B) Both typically hold inventories of work in process.
• C) Both typically hold inventories of raw materials.
• D) Both hold small inventories, thereby reducing the risk of stock-outs.

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Definitions:

Cost Of Goods Sold

The direct costs attributable to the production of goods sold by a company, including materials and labor, used to determine gross profit.

Budgetary Slack

The practice of underestimating revenues or overestimating expenses when preparing a budget to create a cushion for unexpected situations.

Sales Activity

Sales activity encompasses tasks and processes undertaken to sell products or services to customers, including prospecting, presentations, negotiations, and closures.

Budgetary Participation

Involvement of employees in the budget-making process, which can enhance understanding and commitment to financial goals.