An Advantage of the FIFO Method Is That

question 34

Multiple Choice

An advantage of the FIFO method is that:

• A) the figure for ending inventory is made up of current costs on the income statement.
• B) the cost flow tends to follow the physical flow.
• C) it matches current selling prices and current costs.
• D) Both A and B are correct.

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Definitions:

Pro Forma

Financial statements or projections prepared in advance to forecast or plan for future financial scenarios or business operations.

Capacity Level

Capacity level refers to the maximum level of output that a company can sustain to produce in a given period under normal circumstances.

Pro Forma Statements

Financial statements prepared based on certain assumptions and projections, often used for forecasting or planning future financial performance.

Financial Planning

The process of creating strategies for managing finances to achieve personal economic satisfaction, including budgeting, savings, investments, and future planning.