Desired Ending Inventory Is 20% of Next Month's Sales

question 22

Multiple Choice

Desired ending inventory is 20% of next month's sales. If cost of goods sold is $300,000 and next month's sales are $900,000, which of the following statements is true regarding purchases?

• A)Purchases will be more than cost of goods sold.
• B)Purchases cannot be predicted from the information given.
• C)Purchases will be less than cost of goods sold.
• D)Purchases will equal cost of goods sold.

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Definitions:

Hypothalamohypophysial Tract

The neural connection between the hypothalamus and the pituitary gland which regulates hormonal secretion.

Posterior Pituitary

A gland located at the base of the brain that releases hormones, such as oxytocin and vasopressin, into the bloodstream.

Adenohypophysis

The adenohypophysis is the anterior lobe of the pituitary gland, responsible for releasing several major hormones.

Antidiuretic Hormone

A hormone produced by the pituitary gland that regulates the body's retention of water by increasing the concentration of urine.