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AICPA Exam CPA-Business Topic 1 Question 100 Discussion

Actual exam question for AICPA's CPA-Business exam
Question #: 100
Topic #: 1
[All CPA-Business Questions]

Which of the following actions is the acknowledged preventive measure for a period of deflation?

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Suggested Answer: A

Choice 'a' is correct. As the cost of carrying inventory decreases, safety stock would tend to increase to reduce the risk of stock outs.

Choice 'b' is incorrect. As sales become more predictable (sales variability decreases), less (not more) safety stock would be needed because the risk of stock outs would have decreased.

Choice 'c' is incorrect. If the cost of stock outs decrease, safety stock would decrease.

Choice 'd' is incorrect. If lead-time decreases, safety stock would decrease.


by Kristeen at Sep 18, 2024, 07:39 PM

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Celeste
7 days ago
Increasing interest rates during deflation? That's like trying to put out a fire with gasoline!
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Monroe
11 days ago
Wait, isn't decreasing the money supply the way to combat inflation? I'm so confused!
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Desmond
14 days ago
But wouldn't increasing interest rates discourage borrowing and spending, leading to deflation?
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Nan
15 days ago
I disagree, I believe the answer is B) Increasing the money supply.
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Beckie
15 days ago
Increasing the money supply? Sounds like the right move to me. I'll have to remember that one.
upvoted 0 times
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Desmond
16 days ago
I think the answer is A) Increasing interest rates.
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Lizbeth
17 days ago
Hmm, I thought decreasing interest rates was the way to go during deflation. I hope I don't get this one wrong on the exam!
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