The CEO of a fiRm Just Learned That a Small

question 53

Multiple Choice

The CEO of a firm just learned that a small, but highly progressive, competitor is for sale. This is an unexpected opportunity and one that the CEO would like to pursue immediately. The motive behind
Holding cash for such an event is called the ____ motive.

• A) Transaction.
• B) Speculative.
• C) Reserve.
• D) Precautionary.
• E) Concentration.

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Definitions:

FIFO Costing

An inventory valuation method that assumes the first items purchased or produced are the first ones sold, affecting the cost of goods sold and ending inventory.

Opening WIP Inventory

The value of unfinished goods that a company has at the beginning of an accounting period.

FIFO Method

FIFO Method (First In, First Out) is an inventory valuation method where goods first acquired are the first to be sold or removed, affecting stock and cost of goods sold.

Equivalent Units

A concept in cost accounting used to apportion costs to partially completed goods, calculated by taking the number of completed units plus the equivalent units in the process.