Which of the Following Would Act to Reduce the Carrying

question 91

Multiple Choice

Which of the following would act to reduce the carrying costs of inventory?

• A) The inventory is capable of spoiling.
• B) The inventory will rapidly go out of style.
• C) General interest rates decrease in the economy.
• D) General interest rates increase in the economy.

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Definitions:

Revenue Recognition

The principle in accounting that outlines the exact situations in which revenue is to be acknowledged and accounted for.

Transitory Earnings

Earnings that are considered temporary or not expected to persist over time, often removed from projections or models that attempt to predict a company's future profitability.

Extraordinary Loss

Unusual and infrequent charges that are reported separately on a company's income statement, outside of its regular business operations.

Discontinued Operations

Refers to segments or lines of business that a company has decided to sell, dispose of, or otherwise cease operations, and are reported separately from continuing operations in financial statements.