Which of the Following Statements Is Correct

question 119

Multiple Choice

Which of the following statements is correct?

• A)The choice of an inventory costing method is dependent upon the actual physical flow of the goods in inventory.
• B)LIFO should be used during a period of increasing unit costs when the objective is to maximize the ending inventory value on the balance sheet.
• C)FIFO should be used during a period of decreasing unit costs when the objective is to maximize the gross profit reported on the income statement.
• D)The average cost method will result in an ending inventory balance which is somewhere between LIFO and FIFO when inventory unit costs are changing.

---

Definitions:

Estimators

Statistics obtained from sample data used to estimate population parameters.

Unbiasedness

A statistical property indicating that an estimator or methodology does not systematically favor certain outcomes over others.

Sample Variance

The measure of variability in a sample dataset, calculated as the sum of squared deviations from the mean, divided by the number of observations minus one.

Population Variance

A measure of how data points in a given population are dispersed from the average value.