Which of the Following Statements Is Correct with Respect to the Differences

question 33

Multiple Choice

Which of the following statements is correct with respect to the differences between using the weighted-average method or the FIFO method of preparing a process production report?

• A)Use of FIFO is acceptable for GAAP,while use of weighted-average method is not.
• B)FIFO is simpler to use than the weighted-average method.
• C)Use of FIFO or weighted-average results in large differences for companies that maintain minimal work-in-process inventory.
• D)The weighted-average method is often simpler,less costly to prepare,and provides useful information for decision-making.

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Definitions:

Generally Accepted Accounting Principles

A collection of commonly followed accounting rules and standards for financial reporting.

Earnings Manipulation

A practice where managers use judgment in financial reporting and in structuring transactions to alter financial reports to either mislead stakeholders about the underlying economic performance of a company or to influence contractual outcomes that depend on reported accounting numbers.

Managers

Individuals responsible for controlling or administering all or part of a company or similar organization, making decisions regarding its operations.

Multiple-Element Sales

Transactions that involve the sale of multiple products or services for a single price, requiring allocation of revenue among the different elements.