Asked by Sophia Winner on Apr 27, 2024
Verified
The cost flow method that often parallels the actual physical flow of merchandise is the
A) FIFO method.
B) LIFO method.
C) average-cost method.
D) gross profit method.
FIFO Method
"First In, First Out," an inventory valuation method assuming that the first items purchased are the first ones sold, affecting the cost of goods sold and inventory value.
Cost Flow Method
An accounting technique used to value inventory and determine the cost of goods sold by assuming a flow of costs.
- Absorb knowledge on different inventory valuation tactics and how they affect financial statements.
Verified Answer
NB
Norma BejaranoMay 01, 2024
Final Answer :
A
Explanation :
FIFO (First-In-First-Out) assumes that the oldest items purchased are sold first, which closely matches the actual physical flow of merchandise in many businesses. Therefore, it is the best choice among the options given.
Learning Objectives
- Absorb knowledge on different inventory valuation tactics and how they affect financial statements.
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