Which Inventory Method Gives the Most Realistic Net Income

question 65

Multiple Choice

Which inventory method gives the most realistic net income?

• A)FIFO, because it uses cost in the order in which they were incurred
• B)LIFO, because it includes the most recent costs in cost of goods sold
• C)Average-cost, because it averages old and recent costs
• D)The answer depends on whether prices are rising or falling.

---

Definitions:

Deviance

Occurs when someone departs from a norm and evokes a negative reaction from others.

Norm-breaking

Refers to actions or behaviors that deviate from widely accepted social norms or standards.

Sanctions

Measures taken by countries or international bodies to restrict trade, financial transactions, or other economic relations to enforce policies or punish.

Informal Punishment

Involves a mild sanction that is imposed during face-to-face interaction, not by the judicial system.