When Comparing the Average and FIFO Inventory Cost Formulas During

question 107

Multiple Choice

When comparing the average and FIFO inventory cost formulas during a period when prices are rising, which of the following statements is correct?

• A) FIFO will result in a lower inventory balance reported on the balance sheet.
• B) Average will result in a higher cash flow.
• C) FIFO will result in a higher profit reported on the income statement.
• D) Average will result in a higher gross profit reported on the income statement.

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Definitions:

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