A Temporary Gap Between the Demand and Supply of Available

question 26

True/False

A temporary gap between the demand and supply of available capacity results because, in the short term, businesses have a fixed supply of capacity but confront changing demand.

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Definitions:

Specific Identification

An inventory costing method where each item of inventory is individually valued and tracked.

Cost of Goods Sold

Represents the direct costs attributable to the production of the goods sold by a company.

Average Cost Formula

A method used in accounting to calculate the cost of goods sold and ending inventory by averaging the cost of goods available for sale.

Perpetual Inventory System

An inventory management system that continuously updates the quantity and value of inventory on hand after each transaction.