Which of the Following Is NOT a Traditional Reason for Carrying

question 58

Multiple Choice

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

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

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Definitions:

Monthly Compounding

The process where interest on an investment or loan is calculated and added to the principal sum every month.

Payments

Money transferred from one party to another in exchange for goods, services, or to fulfill a contractual obligation.

Account

A record or statement of financial expenditure and receipts relating to a specific period or purpose.

Effective Rate

The actual interest rate an investor receives or pays after the effects of compounding interest and all charges are considered.