Which of the Following Statements Relating to Inventory Levels and Finance

question 30

Multiple Choice

Which of the following statements relating to inventory levels and finance is correct?

• A)Money tied up in inventories is an opportunity cost.
• B)Businesses have to balance money invested in inventory to ensure no missed sales whilst not over-investing.
• C)Overstocked businesses may find it is difficult to sell the inventory due to poor buying decisions.
• D)All of the above statements are correct.

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Definitions:

Units

A measure of quantity, such as items, goods, or services, which can be counted or measured.

FIFO

First-In, First-Out (FIFO) is an inventory valuation method where goods first added to inventory are the first ones considered sold.

Ending Inventory

The financial value of products on hand for selling at the end of a fiscal period.

Units

basic quantities or measurements used as a standard to express values, amounts, or sizes.