In an inflationary period, a firm is likely to show temporary profit increases because
A)accounts receivable collections increase
B)cash balances decline
C)inventory profits are realized
D)all of these

Question

Quizplus · Accepted Answer

During an inflationary period, inventory profits are realized due to rising prices, as the firm sells goods stored at lower costs at higher current prices, resulting in higher profits. However, accounts receivable collections and cash balances may not necessarily increase during this period.

In an Inflationary Period, a Firm Is Likely to Show