The Most Precise of the Three Methods of Cost Assignment

question 25

True/False

The most precise of the three methods of cost assignment is direct tracing since it relies on observable causal relationships.

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Definitions:

Inventory Method

A strategy used by businesses to value and manage their inventory, affecting how costs are recorded and profits calculated.

Weighted-Average

A mathematical average that takes into account the varying degrees of importance of the numbers in a data set.

Ending Inventory

The total value of all unsold goods that a company has in its possession at the end of an accounting period.

Periodic Inventory

An inventory accounting system where inventory levels and cost of goods sold are determined at the end of an accounting period.