Which of the Following Actions Will Tend to Decrease the Inventory

question 105

Multiple Choice

Which of the following actions will tend to decrease the inventory period?
I. discontinuing all slow-selling merchandise
II. selling obsolete inventory below cost just to get rid of it
III. buying raw materials only as they are needed in the manufacturing process
IV. producing goods on demand versus for inventory

• A) I and III only
• B) II and IV only
• C) II, III and IV only
• D) I, II and III only
• E) I, II, III and IV

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Definitions:

Adjusted Trial Balance

A listing of all company accounts and their balances after adjustments, serving as the basis for financial statement preparation.

Return on Assets Ratio

A measure of how effectively a company uses its assets to generate profit, calculated as net income divided by total assets.

DuPont Approach

A method of performance measurement that breaks down return on equity (ROE) into three components: operating efficiency, asset use efficiency, and financial leverage, to help analyze a company's financial condition.

Return on Assets Ratio

A profitability ratio that indicates how efficiently a company uses its assets to generate profit, calculated as net income divided by total assets.