An Entity That Has Taken a Buy Position in a Futures

question 65

True/False

An entity that has taken a buy position in a futures contract on a particular item will make a gain when the price of the item decreases.

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Definitions:

First-In, First-Out Method

An inventory valuation method where the goods first produced or acquired are sold or used before newer inventory.

Equivalent Units

A method used in process costing to convert partially completed goods into a comparable number of fully completed units.

Conversion Costs

Costs incurred to convert raw materials into finished products, often including labor and overhead.

First-In, First-Out Method

An inventory valuation method which assumes that the first items placed in inventory are the first sold.