To Derive the Raw Material to Purchase During an Accounting

question 4

Multiple Choice

To derive the raw material to purchase during an accounting period, an accountant would calculate the raw material required for production and then:

• A) add the beginning raw-material inventory and the desired ending raw-material inventory.
• B) subtract the beginning raw-material inventory and the desired ending raw-material inventory.
• C) add the beginning raw-material inventory and subtract the desired ending raw-material inventory.
• D) add the desired ending raw-material inventory and subtract the beginning raw-material inventory.
• E) add the desired ending raw-material inventory and subtract both the beginning raw-material inventory and the expected units to be sold.

---

Definitions:

Factors Of Production

The inputs used in the creation of goods or services; traditionally includes land, labor, capital, and entrepreneurship.

Capital

Funds or financial assets leveraged by companies to fund their operations and grow their businesses.

Profit

The earnings obtained when the income generated from business operations is higher than the expenses, costs, and taxes required for these operations.

Output Market

Marketplaces where finished goods or services are sold to consumers, as opposed to input markets where raw materials are bought.