Lean Production Should Result in Reduced Inventories

question 281

True/False

Lean production should result in reduced inventories. If lean production is successfully implemented, the difference in net operating income computed under the absorption and variable costing methods should be reduced.

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Definitions:

Transposition

The error of switching the order of digits in numbers, often leading to inaccuracies in financial or data records.

General Ledger

A comprehensive record of all financial transactions over the life of a company, used to prepare financial statements.

Nominal Account

An accounting ledger account that starts each new accounting period with a zero balance and ends with a closed balance to transfer to a real account.

Retained Earnings

Retained Earnings represent the cumulative amount of net income earned by a company that has not been distributed to shareholders as dividends.