For Financial Reporting Purposes, Most Companies Use

question 35

Multiple Choice

For financial reporting purposes, most companies use:

• A)straight-line depreciation.
• B)units-of-production depreciation.
• C)double-declining balance depreciation.
• D)modified accelerated cost recovery system of depreciation.

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Definitions:

Cost Flow Assumption

An accounting method used to determine the value of unsold inventory and cost of goods sold, examples include FIFO, LIFO, and average cost.

Perpetual Inventory System

An accounting method where records of inventory are updated on a continuous basis as goods are sold or received.

Weighted Average

A calculation method that assigns different weights to different items, making some items more influential than others based on their relevance or significance.

Inventory Control

The process of managing inventory to ensure an adequate supply without excessive oversupply.