In Times of Inflation,which Cost Flow Assumption Provides the Highest

question 16

Multiple Choice

In times of inflation,which cost flow assumption provides the highest inventory asset?

• A) FIFO
• B) Moving weighted average
• C) LIFO
• D) It depends on the rate of inflation

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Definitions:

LIFO

An acronym for "Last In, First Out," a method used in inventory management and accounting to value inventory and calculate cost of goods sold.

Taxable Income

Taxable income is the amount of an individual's or a company's income used to calculate how much tax they owe to the government in a given tax year.

Tax Advantage

Financial benefits granted by government taxation policies, such as deductions, exclusions, or credits, to encourage certain activities or investments.

Net Realizable Value

The estimated selling price of goods minus the cost of their sale or completion.