Asked by Taylor Peimbert on Jun 18, 2024
Verified
Which of the following will be the same amount regardless of the cost flow assumption adopted?
A) number of items ordered
B) gross profit
C) cost of goods sold
D) ending merchandise inventory
Cost flow assumption
An accounting method that determines how costs are allocated to inventory and cost of goods sold, such as FIFO, LIFO, or weighted average.
Gross profit
The difference between sales revenue and the cost of goods sold before accounting for operating expenses, interest, taxes, etc.
Ending merchandise inventory
The worth of products on hand for purchase at the conclusion of a financial period.
- Analyze the impact of price changes (increasing or decreasing) on inventory valuation and profitability.
Verified Answer
VN
valeria nevarezJun 19, 2024
Final Answer :
A
Explanation :
The cost flow assumption adopted affects the cost of goods sold and the ending merchandise inventory, which in turn affects gross profit. The number of items ordered, however, is a non-financial item and is not affected by cost flow assumption.
Learning Objectives
- Analyze the impact of price changes (increasing or decreasing) on inventory valuation and profitability.