When Prices Are Constant, Which of the Following Inventory Cost

question 71

Multiple Choice

When prices are constant, which of the following inventory cost formulas will lead to the lowest cost of goods sold figure?

• A) FIFO
• B) Specific Identification
• C) Average
• D) When prices are constant, all cost determination methods will yield the same cost of goods sold figure.

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Definitions:

Stock Dividend

A dividend payment made in the form of additional shares rather than a cash payout.

Retained Earnings

Profits that a company has earned to date, less any dividends or other distributions paid to shareholders, often reinvested back into the company.

Share Capital

The funds raised by a company through the issuance of shares, representing the ownership of the company.

Cumulative Preferred Shares

Preferred stock where dividends accumulate if not paid in a given period and must be paid out before any dividends can be paid to common stockholders.