A FIFO Perpetual Inventory System

question 78

Multiple Choice

A FIFO perpetual inventory system:

• A)assigns the most recent costs to ending inventory.
• B)assigns the most recent costs to cost of goods sold when goods are sold.
• C)reports the oldest costs for ending inventory values.
• D)does not match the typical physical flow of goods.

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Definitions:

Total Cost

The complete cost of producing or acquiring goods or services, including fixed and variable costs.

Department

A distinct part of an organization with a specific function or group of related functions.

Process Costing

An accounting methodology used for distributing costs to each unit of output in continuous production processes.

Journal Entries

The basic method of recording financial transactions in accounting, ensuring every transaction reflects both a debit and a credit.