When the Price of Inventory Is Decreasing, Which of the Following

question 53

Multiple Choice

When the price of inventory is decreasing, which of the following is true regarding the three best-known inventory valuation methods?

• A) The LIFO method will yield the smallest amount for cost of goods sold.
• B) The weighted-average method will yield the largest amount for closing inventory.
• C) The FIFO method will yield the highest amount for closing inventory.
• D) Both LIFO and FIFO will yield a smaller tax obligation than weighted-average.

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Definitions:

Simulation

The use of models, often computerized, to replicate real-life processes, scenarios, or systems for the purpose of training, problem-solving, or prediction.

Scenario Planning

A strategic planning method that organizations use to envision and prepare for future possibilities, helping them navigate uncertainties and make flexible long-term plans.

Nominal Group Input

A technique used to generate ideas and solutions in a group setting, where participants contribute independently before collectively discussing and prioritizing suggestions.

Delphi Group Input

A technique that gathers and synthesizes expert opinions through iterative rounds of questionnaires to achieve a consensus on a specific subject.