Freije Refrigeration Company Has an Inventory of Raw Materials and Parts

question 25

Multiple Choice

Freije Refrigeration Company has an inventory of raw materials and parts consisting of thousands of different items which are of small dollar value individually but significant in total.A fundamental control requirement of Freije's inventory system is that:

• A)Perpetual inventory records be maintained for all inventory items
• B)The taking of physical inventories be conducted on a cycle basis rather than at year?end
• C)The storekeeping function not be combined with the production and inventory record?keeping functions
• D)Material requisitions be approved by an officer of the company

---

Definitions:

Liabilities

Financial obligations or debts that a company owes to others, which need to be settled over time.

Assets

Economic resources owned or controlled by an entity, expected to produce value or benefit in the future.

Cycle Inventory

Inventory that is carried as a result of the production or purchase process, determined by the frequency of orders and the quantity of goods ordered each time.

Demand Variability

The extent to which demand can fluctuate over a period of time, impacting inventory management and planning processes.