Why Is a Cost Flow Assumption Used

question 119

Multiple Choice

Why is a cost flow assumption used?

• A)This is a systematic method for allocating costs between beginning inventory and ending inventory.
• B)This is a systematic method for allocating costs between cost of goods available for sale and ending inventory.
• C)This is a systematic method for allocating costs between cost of goods sold and ending inventory.
• D)This is a systematic method for allocating costs between cost of goods manufactured and cost of goods sold.

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Definitions:

Special Revenue Funds

Governmental funds intended to be used for specific revenue sources that are legally restricted to expenditure for particular purposes.

Debt Service Funds

Governmental funds used to account for the accumulation of resources for, and the payment of, general long-term debt principal and interest.

Capital Projects Funds

Funds used by governmental entities to finance the acquisition or construction of major capital facilities.

Pension Trust Fund

A fund established by an employer to facilitate and organize the investment of employees' retirement funds contributed by the employer and employees.