Asked by Danielle McBratney on Jul 19, 2024
Verified
Never results in either the highest or lowest possible net income
A)FIFO
B)LIFO
C)Weighted average
Weighted Average
A calculation that takes into account the different degrees of importance of the numbers in a dataset, making some values count more heavily than others.
Cost Flow Assumption
Accounting methods used to determine the cost of goods sold and ending inventory, such as FIFO (First-In, First-Out) or LIFO (Last-In, First-Out).
- Familiarize oneself with the different cost flow conjectures and their employment in the appraisal of inventory.
Verified Answer
KP
Kavitha PatchaJul 25, 2024
Final Answer :
c
Explanation :
The weighted average cost flow assumption takes into account both the cost and quantity of inventory purchased during a period. This results in a cost of goods sold and ending inventory value that falls in between the values calculated using FIFO and LIFO. Therefore, it never results in either the highest or lowest possible net income.
Learning Objectives
- Familiarize oneself with the different cost flow conjectures and their employment in the appraisal of inventory.