Which of the Following Is Not an Issue in Keeping

question 158

Multiple Choice

Which of the following is not an issue in keeping track of perpetual inventories under LIFO and weighted-average-cost methods?

• A)The LIFO cost-flow assumption does not follow the logical flow of goods.
• B)Many companies keep track of perpetual inventories in quantities only during the year, making year-end adjusting entries to apply either LIFO or weighted-average-cost to both ending inventory and cost of goods sold.
• C)When costs are changing, it is physically impossible to apply LIFO unit costs to units purchased and sold, as the transactions are happening, using a perpetual inventory accounting system.
• D)All of the above statements are issues in keeping track of perpetual inventories under LIFO and weighted-average-cost methods.

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Definitions:

Capital Gains

The income gained when the selling price of assets such as stocks, bonds, or real estate surpasses their original buying price.

Economic Growth

An increase in the production of goods and services in an economy over a period of time.

Short-Term Capital Gain

Profit from the sale of an asset held for less than a year, subject to tax at ordinary income tax rates.

Net Working Capital

Represents a measure of a firm's liquidity by calculating the excess of current assets over current liabilities, portraying the company's operational efficiency.