During Times of Inflation, Which of These Inventory Accounting Methods

question 3

Multiple Choice

During times of inflation, which of these inventory accounting methods is best for cash flow?

• A) lifo, because the most expensive goods are recorded as being sold first, resulting in a higher cost of goods sold and a lower reported net income.
• B) specific identification, because it correctly identifies the actual item sold and so the actual cost is recorded on the income statement.
• C) weighted average, because it smoothes the reported cost of goods sold over time.
• D) it doesn't matter which you use since cash flow is unaffected by the choice of inventory identification method.
• E) fifo, because the cheapest goods are recorded as being sold first, resulting in lower cost of goods sold and higher reported net income.

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Definitions:

Ganglion Cells

Neurons located in the retina of the eye that process visual information before it is transmitted to the brain.

Rods

Photoreceptor cells in the retina of the eye that are highly sensitive to light and enable vision in low-light conditions.

Cornea

The transparent front part of the eye that covers the iris, pupil, and anterior chamber, contributing primarily to the eye's ability to focus light.

Pupil

The black circular opening in the center of the eye that regulates the amount of light that enters.