Which of the Following Statements About the Computation of Cost

question 54

Multiple Choice

Which of the following statements about the computation of cost of goods sold is true?

• A) Manufacturing and retail businesses must use the specific identification method for tax purposes.
• B) Manufacturing and retail businesses must use the FIFO costing convention for tax purposes.
• C) Manufacturing and retail businesses must use the LIFO costing convention for tax purposes.
• D) Manufacturing and retail businesses that use the LIFO costing convention for tax purposes must also use LIFO for book purposes.

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Definitions:

Aggregation

the process of combining multiple elements, data, or inputs into a summarized or unified whole, often used in the context of data analysis or planning.

Periodic Review Policies

Inventory management techniques that involve reviewing and adjusting inventory levels at fixed intervals to ensure adequate supply.

Safety Inventory

Extra inventory held as a buffer against uncertainty in demand or supply, to ensure service levels.

Product Availability

The extent to which products are in stock and available to be purchased by consumers.