Management Has Authorized the Purchase of a Large Quantity of Inventory

question 111

Multiple Choice

Management has authorized the purchase of a large quantity of inventory for early December.The purchase will have credit terms of 2/10,n/30,they will authorize payment by the discount date.How will this decision affect the period's cash flows from operations-indirect method?

• A)It will increase this period's cash flows from operations.
• B)It will decrease this period's cash flows from operations.
• C)It will not affect this period's cash flows from operations.
• D)This does not affect cash flows from operations.

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Definitions:

Quantity Demanded

A specific quantity of a good that buyers are interested in purchasing at a certain price point.

Law of Demand

The principle that, ceteris paribus, there is an inverse relationship between the price of a good and the quantity demanded.

Quantity Demanded

The amount of a product or service consumers are willing to buy at a given price.

Demand Curve

A graphical representation showing how the quantity of a good or service demanded by consumers changes at different price levels.