Which of the Following Is Not an Acceptable Method of Determining

question 4

Multiple Choice

Which of the following is not an acceptable method of determining inventory cost under GAAP?

• A)FIFO.
• B)LIFO.
• C)Average cost.
• D)All of the above are acceptable.

Calculate required units for production, direct materials, and labor based on budget information.

Identify the sequence of steps in developing a master budget.

Recognize the role of sales forecasts in budgeting.

Appreciate the impact of inaccurate sales forecasting on inventory and production planning.

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Definitions:

Adjusted Trial Balance

A list of all accounts and their balances after adjusting entries have been made, used for preparing financial statements.

Income Statement

A financial statement that shows a company’s revenues, expenses, and profits or losses over a specific period of time.

Income Summary

An account used in the closing process that summarizes revenues and expenses, transferring the net income or loss to retained earnings.

Closing Process

A sequence of steps performed at the end of an accounting period to prepare the accounts for the next period, including closing temporary accounts such as income summary, revenues, and expenses.