Which One of the Following Is Not True Regarding the Fixed

question 50

Multiple Choice

Which one of the following is not true regarding the Fixed Period System (FPS) ?

• A)The time between orders is constant, but the order quantity might vary.
• B)An order is time-triggered, not inventory-triggered.
• C)The optimal replenishment level includes the demand during the review period plus any desired safety stock.
• D)When demand is not certain, the FPS requires more safety stock than the equivalent FQS.

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Definitions:

Interest Expense

The cost incurred by an entity for borrowed funds; it is the price paid for the use of borrowed money or money earned from deposited funds.

Interest Payable

Refers to the amount of interest that has been incurred on borrowed funds but has not yet been paid out to the lender as of the reporting date.

Current Liabilities

Obligations that a company must pay within the coming year or within its normal operating cycle, indicating the company's short-term financial responsibilities.