In a Period of Inflation (Prices Are Rising), Which Inventory

question 84

Multiple Choice

In a period of inflation (prices are rising) , which inventory cost formula will result in higher net income?

• A)FIFO
• B)average cost
• C)Cost of goods sold for the period will be the same under both formulas.
• D)There would be no effect on net income.

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Definitions:

Random Sample

A sample drawn from a population in such a way that every member of the population has an equal chance of being selected.

Sales Data

Information collected about the number of products or services sold in a given time period.

Chi-square Statistic

A measure used in statistics to assess how well an observed distribution matches an expected distribution, used in tests of independence and goodness of fit.

Degrees of Freedom

Degrees of freedom are the number of independent values or quantities which can be assigned to a statistical distribution without violating any constraining conditions.