Keeping Merchandise Inventory at the Maximum Level That Meets the Needs

question 156

True/False

Keeping merchandise inventory at the maximum level that meets the needs of providing goods to customers,with turning over the merchandise inventory efficiently,helps reduce inventory storage costs,insurance costs,and warehousing costs.

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Definitions:

Accounts Receivable

Money owed to a business by its customers for goods or services that have been delivered but not yet paid for.

Average Collection Period

The average number of days it takes for a company to collect payments from its credit sales, a measure of the effectiveness of its credit and collection policies.

Year-End Balance

The final amount of money in an account at the conclusion of a financial year, after all transactions have been accounted for.

Forecasted Net Income

An estimate of a company's profit for a future period, calculated by projecting revenues and subtracting anticipated expenses.