Possible Methods of Determining Whether Inventory Is Properly Valued Are

question 20

Multiple Choice

Possible methods of determining whether inventory is properly valued are:

• A) talking to the workers who handle the inventory
• B) communicating with vendors about inventory costs
• C) speaking with large customers about inventory quality and product returns
• D) all of the above

---

Definitions:

Inventory Costing

Methods used to value and account for inventory, including Specific Identification, FIFO (First-In, First-Out), LIFO (Last-In, First-Out), and Weighted Average.

Conversion Costs

The sum of direct labor and manufacturing overhead costs, representing the costs incurred to convert raw materials into finished products.

First-In, First-Out

A rephrased definition: An accounting method used to value inventory and calculate cost of goods sold, assuming the earliest goods purchased are the first to be sold.

Conversion Costs

Conversion costs are the costs required to convert raw materials into finished products, including labor and overhead.