Match Each of the Following Items with the Appropriate Description

question 32

Multiple Choice

Match each of the following items with the appropriate description in determining whether sales/use tax typically must be collected.
-Prescription drugs and medicines purchased by a consumer.

• A)Taxable
• B)Not taxable

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Definitions:

LIFO Method

The Last-In, First-Out (LIFO) Method is an inventory valuation approach where the last items added to inventory are assumed to be the first sold, affecting the cost of goods sold and inventory valuation on financial statements.

Effective Tax Rate

The average percentage of income that a business or individual pays in taxes, calculated by dividing total tax expense by taxable income.

FIFO Method

An inventory valuation method where the first items placed in inventory are the first sold, standing for First-In, First-Out.

Average-Cost Method

An inventory valuation method that determines the cost of goods sold and ending inventory value by computing the average cost of all similar items.