Which of the Following Statements Is Not True

question 31

Multiple Choice

Which of the following statements is not true?

• A) A two-bin system allows a firm to not have to keep perpetual inventory records.
• B) Using perpetual inventory records results in different order quantities than using a two-bin system.
• C) In a two-bin system, units in the second bin are not used until the first bin is empty.
• D) In a two-bin system, the size of the second bin should equal the demand during replenishment lead time.
• E) Perpetual inventory records are appropriate when using the EPQ model.

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Definitions:

Work In Process

A classification of inventory for items that are in the process of being produced but are not yet completed.

Retail Inventory Method

An accounting approach used by retailers to estimate inventory cost by calculating a cost to retail price ratio and applying it to the ending inventory at retail prices.

Gross Profit Method

An inventory costing method to estimate the cost of goods sold and ending inventory, which calculates gross profit by subtracting the cost of goods sold from net sales.

FIFO Method

"First In, First Out," an inventory valuation method assuming that the first items purchased are the first ones sold, affecting the cost of goods sold and inventory value.