The Jackson Tool Company manufactures only tools. In 2016 Jackson Tools manufactured 20,000 tools, but sold 21,000 tools. In 2016 Jackson Tools' change in inventory was
A) -2,000 tools.
B) -1,000 tools.
C) 1,000 tools.
D) 3,000 tools.

Question

Quizplus · Accepted Answer

The change in inventory is calculated by subtracting the ending inventory from the beginning inventory. Since the problem only provides information about production and sales, we can assume that beginning inventory in 2016 is equal to zero. Therefore, the ending inventory is 1,000 tools (21,000 sold - 20,000 produced = 1,000). Since the inventory increased by 1,000 tools, the change in inventory is -1,000 tools (ending inventory minus beginning inventory), which is answer B.

The Jackson Tool Company Manufactures Only Tools