Additional Inventory Kept Over and Above the Average Amount Required

question 21

Multiple Choice

Additional inventory kept over and above the average amount required to meet demand is called ____ inventory.

• A)Seasonal
• B)Work-in-process
• C)Finished goods
• D)Safety stock

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Definitions:

Prepaid Rent Expense

Prepaid rent expense is an advance payment for rent that is recorded as an asset on the balance sheet until it is used or consumed in future periods.

Liability

An obligation that a corporation or individual has to another entity, typically financial in nature, such as loans or accounts payable.

Asset

Resources owned by an individual or business that have economic value and can be used to meet debts, commitments, or legacies.

Prepaid Rent Expense

An accounting term for rent payments made in advance of the rental period, recorded as an asset on the balance sheet until the period of use.