Which of the Following Statements Regarding Inventory Classifications Is Not

question 117

Multiple Choice

Which of the following statements regarding inventory classifications is not true?

• A)Inventory may include materials used in producing goods for sale.
• B)Companies that are manufacturers list their finished goods,work-in-process and raw materials inventory separately.
• C)Inventory is classified as a long-term asset on the balance sheet.
• D)Merchandisers buy inventory in finished form ready for resale.

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Definitions:

Reasonable Care

The degree of caution and concern an ordinarily prudent person would use in similar circumstances, often used as a standard for determining negligence.

Good Faith

An honest intention to act without taking an unfair advantage over another party.

Limit Liability

A legal principle or provision that caps the amount one can be held responsible for in case of damage or loss.

Stop-payment Order

A request made to a bank by an account holder not to pay a check or transaction previously authorized.