In a Period of Rising Prices, the Inventory Method Which

question 51

Multiple Choice

In a period of rising prices, the inventory method which tends to give the highest reported cost of goods sold is

• A)FIFO.
• B)average cost.
• C)LIFO.
• D)none of these.

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Definitions:

Business Entity Assumption

A fundamental accounting principle that treats the transactions of a business separately from those of its owners or other businesses.

Accounting Information

Data generated from the accounting processes of a company, including financial statements and records that inform stakeholders about its financial performance.

Business Entities

Legal structures that are allowed to engage in business, such as corporations, partnerships, and sole proprietorships.

Liabilities

Financial obligations or debts owed by a business to creditors, which must be settled over time through the transfer of assets, provision of services, or other economic benefits.