All of the Following Are True Regarding the Key Principles

question 63

Multiple Choice

All of the following are true regarding the key principles of forecasting except:

• A) Financial statement forecasts need not be comprehensive.
• B) Forecasts should not manifest wishful thinking.
• C) Financial statement forecasts must be internally consistent.
• D) Financial statement forecasts must rely on assumptions that have external validity.

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Definitions:

Pilferage

A small amount of theft.

Holding Costs

Expenses related to keeping inventory in storage, including warehousing, insurance, and spoilage costs, which are part of the overall inventory carrying costs.

Safety Stock

Additional inventory beyond the expected demand, held to guard against variability in market demand or supply chain disruptions.

ABC Analysis

A method of categorizing inventory into three classes (A, B, and C) based on their importance, with A being the most valuable and C being the least.