One of the Advantages of a Just-In-Time Inventory System Is

question 26

Multiple Choice

One of the advantages of a just-in-time inventory system is that it reduces inventory quantities.Why is this considered to be a benefit?

• A)Carrying inventory incurs storage costs, hence reducing inventory quantities reduces costs.
• B)Carrying large inventory raises the risk that customers will want an item that you do not have.
• C)Carrying large inventory reduces the risk that customers will want an item that you do not have.
• D)none of the above

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Definitions:

Accounts Receivable Turnover

A financial metric that measures how many times a business collects its average accounts receivable amount within a period, indicating the efficiency of credit and collections.

Net Sales

The total revenue from sales transactions after deducting returns, allowances for damaged or missing goods, and any discounts offered.

Allowance Method

An accounting technique used to estimate and account for bad debts, where a portion of receivable accounts is deemed uncollectable.

Bad Debt Recovery

Occurs when a previously written-off debt is recovered either partially or fully after receiving payment from a debtor.