In Periods of Rising Prices, the Inventory Method Which Results

question 46

Multiple Choice

In periods of rising prices, the inventory method which results in the inventory value on the statement of financial position that is closest to current cost is the

• A) FIFO method.
• B) specific identification method.
• C) average-cost method.
• D) tax method.

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Definitions:

Margin

The variance between the cost at which a product is sold and the expense incurred to create it, frequently conveyed as a proportion of the revenue.

Operating Expenses

Expenses incurred from normal business operations, excluding the cost of goods sold, such as selling, general, and administrative expenses.

Minimum Required Rate of Return

The lowest acceptable return on an investment, determined by the investor's or company's financial requirements, risk assessment, and other factors.

Turnover

The total sales or revenue generated by a business within a specific period, or the rate at which inventory or assets are replaced.