Around the End of the Year,an Accountant Orders a Shipment

question 99

True/False

Around the end of the year,an accountant orders a shipment of inventory earlier than normally scheduled because she knows that it will result in lower cost of sales and,thus,a higher profit.This action would be considered unethical because it is not a legitimate business transaction.

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Definitions:

Long Run

A period in which all factors of production and costs are variable, allowing for adjustment to changes in the market or economy.

Economic Profit

A calculation of profitability that takes into account both the direct costs and opportunity costs of pursuing a particular course of action.

Economies Of Scale

The situation when a firm’s average total cost of producing a product decreases in the long run as the firm increases the size of its plant (and, hence, its output).

Excess Production

The situation where more units of a product are produced than are demanded, often resulting in surplus inventory.