Question

The Bona Fide Needs Rule does not prevent maintaining a legitimate inventory at reasonable and historical levels, the "need" being to maintain the inventory level so as to avoid disruption of operations. Usually up to _______ days.

a) 30 days
b) 60 days
c) 90 days
d) 120 days

Answer 1

The Bona Fide Needs Rule allows maintaining an inventory for operation continuity but generally limits this to a need of up to 90 days.

Step-by-step explanation:

The question refers to the Bona Fide Needs Rule, which is a principle used in federal fiscal law to determine the proper period of availability for government funds. Per this rule, funds are available only to satisfy legitimate needs of the appropriation period in which they were appropriated. However, it does allow for the maintenance of an inventory to avoid disruption of operations.

Usually, the level of inventory maintained should not exceed needs for up to 90 days. This time frame is generally seen as a reasonable period for stocking inventory without violating the Bona Fide Needs Rule.