Which of the Following Methods Is Appropriate for a Business

question 56

Multiple Choice

Which of the following methods is appropriate for a business whose inventory consists of a relatively small number of unique, high-cost items?

• A) FIFO
• B) LIFO
• C) average
• D) specific identification

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Definitions:

Scrap Value

The estimated resale value of an asset at the end of its useful life, also known as salvage value.

Incremental Annual

Incremental annual refers to the year-over-year changes or additional amounts in revenue, cost, or other financial metrics.

Internal Rate

Typically refers to the internal rate of return (IRR), which is the discount rate that makes the net present value (NPV) of all cash flows from a particular project equal to zero.

Discount Rate

A discount rate employed to ascertain the present worth of future cash flows within discounted cash flow analysis.