Which of the Following Is NOT a Traditional Reason for Carrying

question 85

Multiple Choice

Which of the following is NOT a traditional reason for carrying inventory?

• A)to satisfy customer demand
• B)to avoid shutting down manufacturing facilities
• C)to support a reliable production process
• D)to hedge against future price increases

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Definitions:

Accrual-based Net Income

The measure of an organization's earning power from ongoing operations, calculated by adding non-cash expenses and revenues booked but not paid to net income under cash accounting.

Domestic Corporations

Companies that are incorporated and operate within the country where they were formed.

Excess Fair Value

The amount by which the fair market value of an asset exceeds its carrying value on the balance sheet.

Franchise Contract

A legal agreement granting a person or group the rights to operate a business under the franchisor's model and brand for a specified period.