When Comparing the Weighted Average and FIFO Inventory Cost Formulas

question 75

Multiple Choice

When comparing the weighted average and FIFO inventory cost formulas during a period when prices are rising, which of the following statements is correct?

• A) FIFO will result in a lower inventory balance reported on the balance sheet.
• B) Weighted average will result in a higher cash flow.
• C) FIFO will result in a higher profit reported on the income statement.
• D) Weighted average will result in a higher gross profit reported on the income statement.

---

Definitions:

Long-Term Potentiation

A long-lasting increase in signal transmission between two neurons, considered a central mechanism behind learning and memory.

Conditioned Eyeblink

A classical conditioning experiment where a subject learns to blink in response to a conditioned stimulus, typically a tone, that has been associated with an unconditioned stimulus, like a puff of air to the eye.

Hypothalamus

A neural structure lying below (hypo) the thalamus; it directs several maintenance activities (eating, drinking, body temperature), helps govern the endocrine system via the pituitary gland, and is linked to emotion and reward.

Amygdala

A section of the brain's limbic system involved in emotion, particularly fear and pleasure.