An Assumption About Cost Flow Is Used

question 186

Multiple Choice

An assumption about cost flow is used

• A)because it is required by the income tax regulation.
• B)even when there is no change in the purchase price of inventory.
• C)only when the flow of goods cannot be determined.
• D)because prices usually change, and tracking which units have been sold is difficult.

---

Definitions:

Adjusting Entries

Entries in the ledger at the finish of an accounting cycle to assign earnings and outlays to the epoch in which they genuinely transpired.

Calendar Year

A period of 365 days (366 in a leap year) starting from January 1st to December 31st, used as a financial or operational year by some organizations.

Insurance Expense

The cost incurred by a company to insure its assets, operations, and potentially its employees, recognized as an expense.