Which of the Following Statements Regarding Presentation and Disclosure of Inventories

question 10

Multiple Choice

Which of the following statements regarding presentation and disclosure of inventories is INCORRECT?

• A) Major spare parts and standby equipment may be recognized as inventory if they are not expected to provide benefits beyond the current accounting period.
• B) Inventories are one of the most significant assets of manufacturing and merchandising companies.
• C) The classification of inventory seldom requires the exercise of professional judgement.
• D) Minor spare parts and servicing equipment are usually classified as inventory.

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Definitions:

Corporation

A legal entity recognized by law as separate from its owners, with its own rights, privileges, and liabilities.

Limited Partnership

A form of partnership consisting of one or more general partners who have full liability and one or more limited partners whose liability is limited to the amount of their investment.

Limited Liability Company

An enterprise framework combining the corporation's limited liability safeguard with the tax efficiency found in partnerships or sole proprietorships.

Fiduciary Duty

A legal obligation of one party to act in the best interest of another when entrusted with care of their assets or interests.