Which of the Following Statements Is True About the Relationship

question 288

Multiple Choice

Which of the following statements is true about the relationship among external, internal and social costs?

• A) External cost is the difference between social and internal costs.
• B) Internal cost is the sum of social and external costs.
• C) Social cost is the difference between internal and external costs.
• D) None of the above.

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Definitions:

Specific Identification

An inventory costing method in which costs are assigned to individual items or batches of items, not to inventory as a whole.

Cost of Goods Sold

This refers to the aggregate expense involved in creating a product that a company sells, including direct labor, material costs, and direct factory overhead.

Ending Inventory

The total value of unsold goods that a company has in stock at the end of an accounting period.

LIFO Method

The Last-In, First-Out (LIFO) Method is an inventory valuation approach where the last items added to inventory are assumed to be the first sold, affecting the cost of goods sold and inventory valuation on financial statements.