Company a Has Inventory Out on Consignment and Held for Sale

question 30

Multiple Choice

Company A has inventory out on consignment and held for sale by Company B.Which company will include the goods in their inventory?

• A)Company A
• B)Company B
• C)either Company A or Company B
• D)cannot be determined from the facts

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Definitions:

Incremental Cost Approach

The method of analyzing the financial information needed for decision making by considering only the costs and benefits that change due to the decision.

Discount Rate

The interest rate used to discount future cash flows back to their present value.

Inflation

The rate at which the general level of prices for goods and services is rising, eroding purchasing power.

Cash Outflow

Payments or expenditures of cash, representing the movement of cash out of a business for expenses, investments, or acquisitions.