Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

7. Receivables and Investments

Types of Receivables

Financial Accounting

7. Receivables and Investments

Types of Receivables

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Multiple Choice

In a two-bin inventory system, the amount contained in the second bin is equal to the:

safety stock or reserve stock

economic order quantity (EOQ)

average daily usage

total annual demand

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Verified step by step guidance

Understand the concept of a two-bin inventory system: This system is used for inventory management where one bin is used for regular consumption and the second bin holds a reserve stock, also known as safety stock, to prevent stockouts.

Clarify the term 'safety stock': Safety stock is the extra inventory kept to mitigate the risk of stockouts due to uncertainties in demand or supply. It ensures smooth operations even during unexpected fluctuations.

Review the options provided: The second bin in a two-bin system is not meant to hold the economic order quantity (EOQ), average daily usage, or total annual demand. Instead, it is specifically reserved for safety stock or reserve stock.

Relate the second bin to its purpose: The second bin acts as a buffer and is only used when the inventory in the first bin is depleted. This aligns with the definition of safety stock.

Conclude the reasoning: Based on the explanation, the amount contained in the second bin in a two-bin inventory system is equal to the safety stock or reserve stock.