An Advantage of the Weighted-Average Method Is That

question 42

Multiple Choice

An advantage of the weighted-average method is that:

• A) it assigns an equal cost to each unit so net income does not fluctuate as much as with other methods.
• B) it takes into account the number of units purchased at each amount, not a simple average cost.
• C) it matches current selling prices and current costs.
• D) Both A and B are correct.

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Definitions:

Amortization

The process of spreading out a loan or intangible asset cost over a specific period of time for accounting and taxation purposes.

Generally Accepted Accounting Principles

A collection of commonly-followed accounting rules and standards for financial reporting.

Straight-Line Method

A way of calculating equal depreciation expenses for an asset over its useful life.

Total Interest Expense

The sum of all interest payments made on debts over a specified period.