An Assumption About Cost Flow Is Used

question 186

Multiple Choice

An assumption about cost flow is used

• A)because it is required by the income tax regulation.
• B)even when there is no change in the purchase price of inventory.
• C)only when the flow of goods cannot be determined.
• D)because prices usually change, and tracking which units have been sold is difficult.

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Definitions:

Working Capital Management

The process of managing a company's short-term assets and liabilities to ensure it has sufficient liquidity to run its day-to-day operations.

Cash Requirements

Cash requirements refer to the total amount of cash a company needs to satisfy its operational expenses and financial obligations in a given period.

Long-Term Debt

Loans and financial obligations lasting more than one year, used as a means for business financing.

Corporate Ownership

Refers to the ownership of shares in a corporation, which represents claims on the corporation's assets and earnings.