Asked by Juliet Sebastian on May 08, 2024
Verified
The more inventory a company has in stock the greater the company's profit.
Inventory
The total amount of goods and materials held by a company with the intent of resale or as part of the production process.
Profit
The financial gain realized when the revenues generated from business activities exceed the expenses and costs incurred in generating those revenues.
- Understand the effects of inventory errors on financial statements.
Verified Answer
JH
James HandriMay 13, 2024
Final Answer :
False
Explanation :
Having too much inventory can lead to increased storage and holding costs, as well as potential obsolescence or spoilage of goods. In addition, tying up too much capital in inventory can limit a company's ability to invest in other areas that could improve profitability.
Learning Objectives
- Understand the effects of inventory errors on financial statements.
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