Which of the Following Statements Is Correct

question 53

Multiple Choice

Which of the following statements is correct?

• A)An inventory blanket lien gives the lending institution a lien against all of the borrower's inventories. However, the borrower must maintain a base inventory as collateral equal to the level that existed when the loan was granted.
• B)A disadvantage of trust receipt financing is the requirement that a trust receipt be issued for specific goods. As a result of this inconvenience, warehousing has become popular as a method of securing loans with inventory.
• C)The fixed costs of a field warehousing arrangement are relatively small and, thus, many small firms make such arrangements.
• D)The use of inventory financing, especially field warehouse financing, as a source of funds for firms has the advantage of small fixed costs but the disadvantage of a lack of spontaneous growth of funds as inventories increase.

Understand and analyze the effect of changes in costs on the break-even point.

Calculate and interpret monthly net income based on given data.

Analyze the impact of selling additional units beyond the break-even point on profit.

Determine required sales to achieve a target net income considering fixed costs and contribution margin ratio.

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Definitions:

Characteristics

Features or qualities that serve to identify, describe, or differentiate an individual, group, or thing.

Domesticated Plants

Plants that have been selectively bred and genetically modified by humans over generations to emphasize or introduce desirable traits.

Continuous Variation

Range of small differences in a trait.

Bell-Shaped Curve

A graphical representation of data that depicts a normal distribution, showing how a variable is spread across a population in a shape that resembles a bell.