In the A-B-C Classification System,items Which Account for 70 to 80

question 27

Multiple Choice

In the A-B-C classification system,items which account for 70 to 80 percent of the annual dollar value (ADV) but relatively few inventory items in terms of the number of SKUs would be classified as:

• A)A items.
• B)B items.
• C)C items.
• D)either A items or B items.
• E)either B items or C items.

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Definitions:

Current Liabilities

Short-term financial obligations that are due to be paid within one year or within the normal operating cycle of a business.

Acid-Test Ratio

A liquidity ratio, also known as the quick ratio, that measures a company's ability to pay off its current liabilities with its quick assets (cash, marketable securities, and accounts receivable).

Stockholders' Equity

The remaining value of a corporation's assets once liabilities are subtracted, which signifies the share of ownership held by the shareholders.

Prepaid Expenses

Expenses paid for in advance and recorded as assets before they are used or consumed.