One of the Traditional Reasons for Holding Inventory Is to Take

question 100

Multiple Choice

One of the traditional reasons for holding inventory is to take advantage of quantity discounts and hedge against future price increases. The JIT solution is to

• A)reduce setup costs.
• B)reduce lead time.
• C)use long-term contracts with suppliers.
• D)use total quality control.

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Definitions:

Cash Dividend

A distribution of a portion of a company's earnings, decided by the board of directors, paid to a class of its shareholders in the form of cash.

Net Income

The total profit of a company after all expenses and taxes have been subtracted from total revenues, indicating the company's financial performance over a specific period.

Trading Securities

Financial instruments bought and sold for the purpose of generating profits on short-term fluctuations in price.

Unrealized Gains

Profits that have been achieved on paper from investments but have not yet been sold for cash, and therefore are not reflected in the income statement.