If a company is planning to build inventory, general account If a company is planning to build inventory,A. production should exceed sales.B. sales should exceed production.C. production should equal sales.D. production should equal inventory.

The correct answer is:A. production should exceed sales. Explanation:If a company is planning to…

Answered: If a company is planning to build…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter18: The Management Of Accounts Receivable And Inventories

Section: Chapter Questions

Problem 20QTD

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Similar questions

What is the purpose of the lower of cost or net realizable value rule? What would happen if a company was to report their inventory at replacement cost?
The application of the lower of cost or market rule to inventory valuation is an example of a. the revenue realization principle b. the going concern assumption c. special industry practices d. conservatism
Which of the following statements regarding the lower of cost and net realizable value (LCNRV) rule is true? a.The LCNRV rule is an application of the cost principle. b.When the net realizable value of inventory drops below the cost of inventory, an adjustment is made to decrease inventory to its net realizable value and decrease income. c.If a company uses the LCNRV rule, there is no need to use a cost flow assumption such as FIFO, or weighted average cost. d.When the net realizable value of inventory is above the cost of inventory, an adjustment is made to increase inventory to its net realizable value and increase income.
The cost of inventory owned by a company is considered a : opportunity cost, sunk cost, or economic cost
Why is the level of and movement in the operating expense percentage an important indicator of financial risk? which answer is it below? a. It provides important insight into management integrity b It is an indicator of production efficiency. c. It reveals the success of the business's Inventory procurement strategies d. It is a measure of expense management, exclusive of production and financing costs. .
Generally accepted accounting principles require that the inventory of a company be reported at: Multiple Choice Market value. Historical cost. Lower of cost or market. Replacement cost. Retail value.
Which of the following statements is NOT true of Economic Order Quantity? O A. The economic order quantity mathematically determines the minimum total inventory cost B. The EOQ is directly proportional to the sales per period O C. The optimal order size is determined by the EOQ model D. The EOQ ignores inventory reorder costs and inventory carrying costs
Which cost flow assumption generally results in the highest reported amount of net income when inventory costs are rising? Explain.
Which statements below are true? 1. LCM and LCNRV may be applied by individual products, by product category or by total inventory. 2. A firm that wants to minimize the negative impact of inventory write-down on net income should apply LCM or LCNRV by individual products. 3. If inventory write-down is usual and not substantial, a firm should debit "Loss on inventory write-down” and credit "Inventory". 4. LCM and LCNRV applied by total inventory will result in higher value of inventory and lower inventory write-down than by individual products, by product category. 5. If inventory write-down is unusual and substantial, a firm should debit "Cost of good sold" and credit "Inventory".
What is the effect on the cost of goods sold, gross profit, and net income if ending merchandise inventory is understated?
Identify that if prices are rising, which inventory cost flow method will produce the highest amount of ending inventory? A. Weighted average B. LIFO C. FIFO S. LIFO, FIFO, and weighted average will all produce the same amount of cost of goods sold.
Under the lower of cost or market inventory valuation rule, market value of inventory is defined as: a.Net realizable value. b.Net realizable value minus a normal profit margin. c.The lower of net realizable value or current replacement cost. d.Current replacement cost.

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If a company is planning to build inventory, A. production should exceed sales. B. sales should exceed production. C. production should equal sales. D. production should equal inventory.