The Use of the FIFO Cost Flow Assumption

question 83

Multiple Choice

The use of the FIFO cost flow assumption:

• A)means that the oldest inventory is considered to be the first sold.
• B)ensures that the ending inventory contains the oldest inventory costs.
• C)requires that a periodic inventory system be used.
• D)results in the best matching of costs to the physical flow of goods.

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Definitions:

Futures Exchange

A Futures Exchange is a central marketplace where people can trade standardized futures contracts; that is, contracts to buy or sell assets at a future date at an agreed-upon price.

Interest Rate Swap

A financial derivative contract where two parties exchange interest rate payments, typically one with a fixed rate and the other with a floating rate.

Futures Put Option

A financial contract giving the buyer the right, but not the obligation, to sell a futures contract at a specified price within a specified time.

Sale Price

Sale price refers to the final price at which a product or service is sold after any discounts or promotions are applied.