Which One of the Following Statements Regarding Changing Inventory Methods

question 122

Multiple Choice

Which one of the following statements regarding changing inventory methods is true?

• A) A change in inventory methods can be justified if the change is made to better match profits with revenue.
• B) One place that the reader of an annual report would be able to identify that a company changed inventory methods is the statement of stockholders' equity.
• C) Changing inventory methods affects consistency.
• D) Tax advantages are valid justification for changing inventory methods.

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Definitions:

Money Income

It refers to the total amount of monetary earnings received by an individual or household, including wages, salaries, and other forms of financial income.

Revenues

The sum of money a business acquires from selling goods or offering services over a certain time frame.

Households

Economic units that represent all individuals living in a single dwelling, sharing income and expenses; primary consumers in the economy.

Centrally Planned Economies

Economic models in which all decisions about what to produce and how to distribute goods and services are made by the government or a central body.