Asked by jessica rogers on Apr 25, 2024
Which of the following is the best definition of carrying costs?
A) The time between receipt of inventory and payment for it.
B) A secured short-term loan that involves either the assignment or factoring of receivables
C) The time between sale of inventory and collection of the receivable.
D) Costs that rise with increases in the level of investment in current assets.
E) A forecast of cash receipts and disbursements for the next planning period.
Carrying Costs
Expenses associated with holding or storing inventory over a period of time, including insurance, storage, and depreciation.
Current Assets
Assets that are expected to be converted into cash, sold, or consumed in the business within one year or within the normal operating cycle.
Investment
The allocation of resources, such as time, money, or effort, in expectation of future benefits or returns.
- Identify and describe various costs associated with maintaining inventory, including carrying and shortage costs.
Learning Objectives
- Identify and describe various costs associated with maintaining inventory, including carrying and shortage costs.
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