A Method of Allocating Merchandise Cost That Assumes the First

question 13

Multiple Choice

A method of allocating merchandise cost that assumes the first merchandise bought was the first merchandise sold is called the

• A) last-in, first-out method.
• B) first-in, first-out method.
• C) specific identification method.
• D) average cost method.

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Definitions:

Operating Activity

Activities that involve the core business operations of a company, such as selling, managing, and producing goods and services.

Paying Interest

The act of providing compensation to lenders for the use of borrowed money, usually calculated as a percentage of the principal amount.

Lenders

Individuals or institutions that provide funds to others under the agreement that the funds will be repaid, typically with interest.

Double-Entry Bookkeeping

An accounting system where every entry to an account requires a corresponding and opposite entry to a different account, ensuring the accounting equation remains balanced.