The Method of Accounting for Inventory That Assigns All Manufacturing

question 9

Multiple Choice

The method of accounting for inventory that assigns all manufacturing costs to inventory is sometimes referred to as:

• A)absorption costing.
• B)FIFO.
• C)the weighted average cost method.
• D)conversion costing.

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Definitions:

Potential GDP

The highest level of Gross Domestic Product (GDP) an economy can sustain over a long period without increasing inflation, reflecting its full employment output.

Inflation

A widespread rise in prices and a decrease in the value of money.

Spending Multiplier

A concept in Keynesian economics that quantifies the effect of an increase in autonomous spending on the total economic output.

Potential Output

The highest level of economic output that can be sustained over the long term without increasing inflation.