Which of the Following Statements Regarding First-In, First-Out (FIFO) Process

question 99

Multiple Choice

Which of the following statements regarding first-in, first-out (FIFO) process costing is(are) true?
(A) First-in, first-out (FIFO) process costing transfers out the costs in beginning inventory before transferring out the costs associated with units started and completed.
(B) First-in, first-out process costing requires one additional step in assigning costs to the units transferred out and the ending Work-in-Process Inventory.

• A) Only A is true.
• B) Only B is true.
• C) Both of these are true.
• D) Neither of these is true.

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Definitions:

Prepaid Freight

Costs paid by a shipper in advance for shipment of goods, indicating that the sender bears the freight charges.

Cash Discount

A reduction in the invoice price offered to buyers as an incentive for early payment.

Wholesalers

Companies that sell merchandise to other businesses rather than to the public.

Credit Terms

Terms for payment on account by the buyer to the seller.