Asked by Logan perry on Jul 11, 2024
Verified
Cost flow is in the order in which costs were incurred when using
A) average cost
B) last-in, first-out
C) first-in, first-out
D) weighted average
Cost Flow
The pattern in which costs move through a business, beginning with the acquisition of raw materials and ending with the delivery of final products to consumers.
First-In, First-Out
A method of valuing inventory that presumes items are sold in their purchase sequence, first selling the oldest products.
- Comprehend how cost flows influence the appraisal of inventory.
Verified Answer
MP
Marcos PeresJul 12, 2024
Final Answer :
C
Explanation :
First-in, first-out (FIFO) assumes that the first inventory purchased is the first sold. This follows the cost flow assumption that costs flow in the order in which they were incurred. Therefore, FIFO is the best choice for cost flow.
Learning Objectives
- Comprehend how cost flows influence the appraisal of inventory.