A Rising Balance in the Inventory Account and a Falling

question 88

Multiple Choice

A rising balance in the inventory account and a falling inventory turnover ratio implies that the inventory build up is occurring because:

• A)goods are not selling as fast as anticipated.
• B)the company is expecting to sell more in the future.
• C)goods are selling,but it is taking longer to collect payment.
• D)goods cannot be shipped fast enough.

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Definitions:

Personal Records

Personal records are documents or files pertaining to an individual's private life, including personal identification, financial accounts, health records, and employment details.

Generally Accepted Accounting Principles

A set of accounting standards, principles, and procedures that companies must follow when they compile their financial statements, ensuring transparency and comparability.

GAAP

Generally Accepted Accounting Principles; a collection of commonly-followed accounting rules and standards for financial reporting.

General Accounting Procedures

The standardized methods and practices used by accountants to prepare, present, and report financial statements.