An Ideal Situation Is Where a Business Receives New Inventory

question 31

Multiple Choice

An ideal situation is where a business receives new inventory just as the last unit of the previous order is sold.However,this rarely occurs because the:

• A) inventory level is not affected by demand.
• B) delivery times never fluctuate.
• C) sales volumes are not constant.
• D) estimate never exceeds demand.

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Definitions:

Scrap Value

The anticipated value of an asset when it reaches the end of its functional lifespan, commonly utilized in figuring out depreciation.

Units-Of-Activity Method

A method of depreciation that provides for depreciation expense based on each unit of activity of a fixed asset.

Depreciable Cost

The total cost of a tangible asset minus its estimated salvage value, representing the amount subject to depreciation over the asset's useful life.

Estimated Output

The anticipated quantity of products or services that a business expects to produce over a certain period.