Match Each Description to the Appropriate Cost Flow Assumption (A-D)

question 131

Multiple Choice

Match each description to the appropriate cost flow assumption (a-d) .
-Cost flow is assumed to be in the reverse order of costs incurred.

• A)Weighted average
• B)First-in, first-out (FIFO)
• C)Last-in, first-out (LIFO)
• D)Specific identification

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Definitions:

FIFO Process Cost Method

An accounting method for valuing inventory and the cost of goods sold based on the assumption that the earliest goods purchased or manufactured are sold first.

Equivalent Units

A method used in process costing that converts partially completed units into a number of fully completed units.

Direct Materials Costs

The cost of raw materials that are directly used in the manufacture of a product.

FIFO Method

First-In, First-Out, an inventory valuation method where the first items purchased are the first ones to be removed from inventory.