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

5. Inventory

Inventory Errors

Financial Accounting

5. Inventory

Inventory Errors

Previous problemNext problem

Struggling with Financial Accounting?

Join thousands of students who trust us to help them ace their exams!Watch the first video

Multiple Choice

Which of the following costs is NOT considered an inventory holding (or carrying) cost?

Cost of storage facilities

Cost of purchasing inventory

Cost of inventory obsolescence

Cost of insurance on inventory

Previous problemNext problem

Verified step by step guidance

Understand the concept of inventory holding (or carrying) costs: These are costs incurred to store and maintain inventory until it is sold. Examples include storage costs, insurance, and costs related to inventory obsolescence.

Review each option provided in the problem: Analyze whether each cost is directly related to holding or maintaining inventory.

Option 1: Cost of storage facilities - This is a holding cost because it is directly related to storing inventory.

Option 3: Cost of inventory obsolescence - This is a holding cost because it represents the risk of inventory losing value over time while being stored.

Option 4: Cost of insurance on inventory - This is a holding cost because it is incurred to protect inventory while it is stored. Option 2, Cost of purchasing inventory, is NOT a holding cost because it is related to acquiring inventory, not maintaining it.