Which of the Following Statements Is True of Process Costing

question 56

Multiple Choice

Which of the following statements is true of process costing?

• A) In the period of rising prices, weighted-average process-costing method will result in higher operating income as compared to FIFO process-costing method.
• B) The operating income and the income tax liability of a company are not affected by the method of process-costing being followed by the company.
• C) In the period of rising prices, weighted-average process-costing method will result in lower cost of goods sold as compared to FIFO process-costing method.
• D) In a period of falling prices, weighted-average process-costing method will result in a higher income tax liability as compared to FIFO process-costing method.

---

Definitions:

Scrap Value

The estimated resale value of an asset at the end of its useful life, often considered in depreciation calculations.

Units-Of-Production Method

A depreciation method that allocates the cost of an asset over its useful life based on the units it produces, reflecting usage intensity.

Scrap Value

The estimated resale value of an asset at the end of its useful life, often considered when assessing depreciation for accounting purposes.

Units-Of-Production Method

An accounting method for depreciation that allocates expense based on the actual usage or production levels of assets.