The Cost of Holding Inventory Is the Interest Paid on the Money

question 94

True/False

The cost of holding inventory is the interest paid on the money used to buy the inventory.

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Definitions:

Collection Float

The time delay between when a check is deposited and when the funds become available in the account.

Cheques

Written, dated, and signed instruments that direct a bank to pay a specific sum of money to the bearer or the person named on it.

Lockbox System

A lockbox system is a service offered by banks to companies for the receipt of payment from customers, under which the payments are directed to a special post office box rather than to the company.