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

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Multiple Choice

Which of the following is NOT considered a pressure to hold large inventories?

Ability to take advantage of quantity discounts

Preparation for seasonal demand fluctuations

Protection against stockouts

Desire to minimize storage costs

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Verified step by step guidance

Understand the concept of inventory pressures: Inventory pressures refer to factors that encourage businesses to hold larger quantities of inventory. These pressures typically arise from operational, financial, or market-related considerations.

Analyze each option provided: Evaluate how each option relates to the concept of inventory pressures. For example, 'Ability to take advantage of quantity discounts' encourages holding larger inventories to benefit from cost savings.

Consider seasonal demand fluctuations: Businesses often hold larger inventories to prepare for periods of high demand, ensuring they can meet customer needs without delays.

Examine stockout protection: Holding larger inventories helps prevent stockouts, which can lead to lost sales and dissatisfied customers. This is another pressure to maintain higher inventory levels.

Identify the correct answer: 'Desire to minimize storage costs' is NOT a pressure to hold large inventories. Instead, it is a reason to reduce inventory levels, as holding large inventories increases storage costs.