Which of the Following Statements Is True

question 135

Multiple Choice

Which of the following statements is true?

• A)When unit costs are steadily rising or falling,the weighted average cost method yields a cost of goods sold between that of FIFO and LIFO.
• B)FIFO will lead to the highest net income if unit costs are falling.
• C)LIFO will always yield a smaller net income than FIFO.
• D)Specific identification is the most practical,but least accurate,measure of cost and net income.

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Definitions:

Target Profit

Target profit is the amount of net income a company aims to achieve for a specific period as part of its financial and operational goals.

Break-Even Sales

The amount of revenue from sales needed to cover all fixed and variable expenses, at which point a business neither profits nor loses money.

Contribution Margin Ratio

A financial metric indicating the portion of sales revenue that is not consumed by variable costs, represented as a percentage of total sales.

Monthly Fixed Expense

Regular, unchanging expenses that occur on a monthly basis, such as rent or salaries, regardless of business activity levels.