The FASAB Allows Entities to Value Inventories Held for Sale

question 12

Multiple Choice

The FASAB allows entities to value inventories held for sale at which of the following values?

• A) Historical cost, using FIFO.
• B) Historical cost, using weighted average.
• C) Latest acquisition cost.
• D) All of the above.

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Definitions:

Merchandise Inventories

Goods that a company holds for the purpose of sale in the ordinary course of business, including finished products, work in progress, and raw materials.

Cost of Goods Sold

The direct costs attributable to the production of the goods sold by a company, including material and labor expenses.

Monthly Expenses

Recurring costs or outlays that occur every month, such as rent, utilities, payroll, and other operational charges.

Master Budget

A comprehensive financial plan that includes both operational and financial budgets, representing a company’s overall plan of action for a future period.