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

1. Introduction to Accounting

Types of Accounting

Financial Accounting

1. Introduction to Accounting

Types of Accounting

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

Companies hold safety stock inventory due to which of the following reasons?

To reduce the number of products available for sale

To comply with tax regulations

To increase the carrying cost of inventory

To protect against unexpected fluctuations in demand or supply delays

Previous problemNext problem

Verified step by step guidance

Understand the concept of safety stock inventory: Safety stock is extra inventory held by a company to mitigate risks of stockouts caused by unexpected fluctuations in demand or supply chain delays.

Analyze the incorrect options: Holding safety stock does not aim to reduce the number of products available for sale, comply with tax regulations, or increase carrying costs. These are not valid reasons for maintaining safety stock.

Focus on the correct reason: Safety stock is maintained to ensure that the company can continue operations smoothly even when there are unexpected changes in customer demand or delays in receiving supplies.

Relate this to financial accounting: Safety stock impacts inventory management and carrying costs, which are accounted for in financial statements. Proper inventory management ensures accurate reporting of assets and avoids disruptions in sales revenue.

Conclude the reasoning: The correct answer is 'To protect against unexpected fluctuations in demand or supply delays,' as this aligns with the purpose of safety stock in inventory management.