The Inventory Allocation Method Used for Companies That Maintain Base

question 86

Multiple Choice

The inventory allocation method used for companies that maintain base stocks of inventory items is the ________.

• A) LIFO method
• B) specific identification method
• C) FIFO method
• D) moving-average method

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Definitions:

Deferred

Refers to items or transactions that have been postponed or delayed to a future date.

Cash Basis

An accounting method where revenues and expenses are recognized only when cash is received or paid out, respectively.

Accrual Basis

A financial recording technique that documents income and costs at the time they are generated or incurred, without consideration of when the actual cash transaction occurs.

Revenues

The total amount of income generated by the sale of goods or services related to a company's primary operations.