Carrying Insufficient Quantities of Inventory on Hand

question 103

Multiple Choice

Carrying insufficient quantities of inventory on hand:

• A)can inadvertently lower a company's costs so much that its taxes become excessive.
• B)can cause customers to go elsewhere to obtain the product.
• C)has little effect on customer satisfaction.
• D)all of the answers are acceptable.

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Definitions:

Compounded Monthly

Refers to the process of applying interest to an initial amount and any accumulated interest on a monthly basis.

Present Value

The current worth of a future sum of money or stream of cash flows given a specified rate of return.

Trust Fund

A fund comprised of a variety of assets intended to provide benefits to an individual or organization.

Effective Rate

is the interest rate on a loan or financial product, restated from the nominal rate as an annual rate that may incorporate compounding.