The Inventory Cost Formula That Results in the Inventory Value

question 7

Multiple Choice

The inventory cost formula that results in the inventory value on the statement of financial position that is closest to its actual cost is

• A)FIFO.
• B)specific identification.
• C)average cost.
• D)either FIFO or average cost.

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Definitions:

Adjusting Entries

At the conclusion of an accounting cycle, entries are documented in the accounting ledger to distribute revenues and costs to the actual period they happened.

Types

Varieties or classifications into which objects, people, or concepts can be grouped based on shared characteristics.

Profit Margin Ratio

A financial metric used to evaluate a business's profitability by dividing net income by net sales.

Industry Average

A benchmark or standard performance metric that represents the average performance of companies within a particular industry.