Most Methods of Pricing Inventories Are in Accord with Generally

question 8

Multiple Choice

Most methods of pricing inventories are in accord with generally accepted accounting principles and generally are permissible for income tax purposes. The method that must be used for financial reporting purposes if used for tax purposes is

• A) moving average.
• B) weighted average.
• C) LIFO.
• D) FIFO.

---

Definitions:

Lost Sales

Revenue that a company could have earned but didn't because of not having enough stock, closing an order, or other reasons.

Merchandise Inventory

Refers to the goods a company holds for the purpose of selling them to customers. It is considered a current asset on the balance sheet.

Budgeted Cost

This refers to the predicted costs of goods, services, projects, or operations that are planned for a future period.

Merchandise Purchases Budget

An estimate detailing the amount of goods a company plans to purchase over a certain period to meet its sales and inventory needs.