A Danger of an Excessive Investment in Inventory for the Small

question 44

Multiple Choice

A danger of an excessive investment in inventory for the small business is:

• A)excessive inventory taxes by local and state government.
• B)minimizing reordering costs.
• C)creating too quick a turnover of inventory.
• D)tying up an excessive amount of the firm's capital.

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Definitions:

Parent-Company Extension Method

An accounting approach used in consolidation, where the parent company's financial statements extend to include the subsidiary's transactions and balances.

Goodwill

Goodwill is an intangible asset that arises when a company acquires another business for more than the fair value of its net identifiable assets.

NCI

Non-Controlling Interest, which refers to the equity in a subsidiary not attributable, directly or indirectly, to the parent company.

Common Shares

Equity securities representing ownership in a company, giving holders voting rights and a share in the company's profits via dividends.