Which One of the Following Statements About Inventory Is Not

question 155

Multiple Choice

Which one of the following statements about inventory is not correct?

• A)An increase in inventory levels is always a sign of inefficiency in inventory management.
• B)The measurement of inventory affects both the balance sheet and the income statement within an accounting period.
• C)The ending inventory of one accounting period becomes the beginning inventory of the next accounting period.
• D)The cost of inventory can vary over time and may be affected by technological innovation.

---

Definitions:

Domestic Producers

Companies or individuals that produce goods or services within their home country.

Equilibrium Price

The cost at which the volume of goods available equals the volume sought by consumers.

Equilibrium Quantity

The amount of products or services available and sought after at the balance price.

Consumer Surplus

The divergence between the total price consumers are prepared to pay for a good or service and the actual price paid.