Which of These Is Not Considered a Cost of Holding

question 3

Multiple Choice

Which of these is not considered a cost of holding inventory?

• A)Opportunity cost of having funds tied up in inventory.
• B)Risk of bad debts.
• C)Cost of storage and handling.
• D)Risk of obsolescence.

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Definitions:

Equity Method

An accounting technique used to record the investments in other companies where the investor has significant influence but does not fully control the investee.

Excess Amortizations

Excess Amortizations refer to the amount by which amortization expenses exceed what is deemed necessary or standard for a given period, often adjusting the value of intangible assets.

Intra-Entity Transactions

Transactions occurring between divisions or departments within the same company.

Intra-Entity Gross Profit

The profit realized from transactions within segments of the same company, not reflected in consolidated financial statements until realized externally.