Matching
Match the statements below with the appropriate cost flow method.Some methods may be used more than once and others may not be used at all.
Premises:
matches the oldest costs with sales on the income statement
the cost flow method that reduces taxable income,relative to the other methods,in a period of rising inventory costs
is based on a calculation that divides the cost of goods available for sale by the number of units available for sale
results in the highest current asset balance,relative to the other methods,in a period of rising prices
would be the best method if inventory costs are rising and the objective is to maximize net income
tends to be used only in low-volume businesses
Responses:
S = Specific identification method
L = LIFO
W = Weighted average method
F = FIFO
Correct Answer:
Premises:
Responses:
matches the oldest costs with sales on the income statement
the cost flow method that reduces taxable income,relative to the other methods,in a period of rising inventory costs
is based on a calculation that divides the cost of goods available for sale by the number of units available for sale
results in the highest current asset balance,relative to the other methods,in a period of rising prices
would be the best method if inventory costs are rising and the objective is to maximize net income
tends to be used only in low-volume businesses
Premises:
matches the oldest costs with sales on the income statement
the cost flow method that reduces taxable income,relative to the other methods,in a period of rising inventory costs
is based on a calculation that divides the cost of goods available for sale by the number of units available for sale
results in the highest current asset balance,relative to the other methods,in a period of rising prices
would be the best method if inventory costs are rising and the objective is to maximize net income
tends to be used only in low-volume businesses
Responses:
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