Use the Information Below to Answer the Following Questions

question 41

Multiple Choice

Use the information below to answer the following questions
Aqua Ltd has forecast the yearly demand for its product as 5,000 units. 100 units of material must be used to produce the product. The cost of placing a single order for raw materials is $20, and the cost of holding one unit of material is $0.40 a year.
-The statement that is not true concerning the just-in-time inventory management system is:

• A)The problem of holding inventory is shifted to the supplier.
• B)The aim of the system is to eliminate the need for the business to hold inventory.
• C)The approach is a theoretical one only and has not really been tried in practice.
• D)For the system to work, there must be a close relationship between the business and its supplier.

---

Definitions:

Tax Purposes

The specific reasons or considerations for calculations or filings as required by tax laws.

Impairment Tests

Assessments to determine if an asset's carrying amount exceeds its recoverable amount, indicating a loss in value.

Fair Value

A measure of the estimated price at which an asset or liability could be traded in a transaction between willing parties, other than in a liquidation sale.

FASB

stands for Financial Accounting Standards Board, an independent organization responsible for establishing accounting and financial reporting standards for companies and nonprofits in the United States.