Which of the following is NOT the aspect of inventory purchase?
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A. B. C. D.B
Based on the given options, the answer that does not represent an aspect of inventory purchase is option D: "There might be some fraud scheme in inventory."
Let's break down each option and explain why the other options are aspects of inventory purchase:
A. Inventory purchases purposely increase in year 1 only to be liquidated in year 2: This aspect suggests a potential fraudulent scheme known as "channel stuffing." It involves intentionally inflating inventory purchases in one period to make sales appear higher than they actually are. By doing so, a company can manipulate its financial statements to show inflated revenues and deceive investors or creditors.
B. Inventory for the year 2 will be much greater than year 1: This aspect refers to the concept of inventory growth or buildup. If inventory for the second year is significantly higher than in the first year, it can indicate various factors, such as increased production, stockpiling inventory for expected higher sales, or changes in the company's strategy or market demand. While not necessarily indicative of fraud, it is an aspect related to inventory purchase and management.
C. Increased sales in year 2 are unexpected, and purchase of inventory does not keep pace with the sales: This aspect points out a potential issue known as "stockouts." When a company experiences unexpected sales growth, it may face challenges in maintaining adequate inventory levels to meet the increased demand. If the purchase of inventory does not keep pace with sales, it can lead to stockouts, customer dissatisfaction, lost sales, and missed profit opportunities. While not directly related to fraud, it is an important aspect of inventory purchase and management.
D. There might be some fraud scheme in inventory: This option suggests the possibility of a fraud scheme specifically related to inventory. However, the question asks for the option that is NOT an aspect of inventory purchase. Therefore, option D does not represent an aspect of inventory purchase but instead raises concerns about potential fraudulent activities related to inventory.
In conclusion, option D ("There might be some fraud scheme in inventory") is the correct answer as it does not represent an aspect of inventory purchase.