Inventory is a "necessary evil" in a financial management system. It is an "evil" because
A) it ties up funds that are not actively productive.
B) supply and demand cannot be managed to coincide precisely with day-to-day operations.
C) it reduces cash when it is sold.
D) it deteriorates; therefore, a certain percent is lost to spoilage and waste.

Question

Quizplus · Accepted Answer

Inventory ties up funds that are not actively productive, as they are sitting in a warehouse or on a shelf instead of being used for other purposes such as investments or paying off debts.

Inventory Is a "Necessary Evil" in a Financial Management System