Which of the Following Is Not a Reason to Carry

question 76

Multiple Choice

Which of the following is not a reason to carry inventory?

• A) To provide a safeguard for variation in raw material delivery time
• B) To take advantage of economic purchase-order size
• C) To maintain independence of operations
• D) To meet variation in product demand
• E) To keep the stock out of the hands of competitors

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Definitions:

Retention for Investment

The practice of holding back a portion of earnings or profits for reinvestment in the business, rather than distributing them as dividends.

Disposition of Earnings

Decisions made by a company regarding the allocation of its net income, including dividends distribution and retained earnings.

Cash Payment

A transaction in which money (in the form of cash) is given by one party to another in exchange for goods, services, or to settle a debt.

Signaling Effect

The phenomenon where actions by a company provide clues or signals to the market about its potential performance or financial health.