Why Are Inventories Included in the Computation of Net Income

question 30

Multiple Choice

Why are inventories included in the computation of net income?

• A) To determine cost of goods sold.
• B) To determine sales revenue.
• C) To determine merchandise returns.
• D) Inventories are not included in the computation of net income.

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Definitions:

Evidence-based

Practices or decisions that are grounded on the most current and rigorous scientific research.

Face Validity

The extent to which a test or assessment appears effective in terms of its stated aims to those taking or observing it.

Frequency, Intensity, Duration

Metrics used to describe and assess the characteristics of an event or activity, particularly in contexts like exercise, therapy, and research.

Creaming

The practice of selectively choosing the best or most profitable customers or clients, often leading to discrimination against those perceived as less desirable.