In a Period of Rising Prices, Which of the Following

question 2

Multiple Choice

In a period of rising prices, which of the following inventory cost formulas generally results in the lowest net income figure?

• A)average cost
• B)FIFO
• C)The inventory cost formula only affects the statement of financial position.
• D)Need more information to answer.

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Definitions:

Implied Contract

An agreement created by actions of the parties involved, rather than written or spoken words, which has the same legal force as a written contract.

Executed Contract

A contract in which all parties involved have fulfilled their obligations as outlined in the agreement.

Executory Contract

A contract that has not yet been fully performed.

Executory

Executory refers to a contract or agreement in which some future act or obligation remains to be performed under its terms.