The First-In, First-Out (FIFO)method Creates Better Month-To-Month Cost Comparisons Than

question 131

Multiple Choice

The first-in, first-out (FIFO) method creates better month-to-month cost comparisons than the weighted-average method:

• A)as it does not recognize transferred in units from other processes.
• B)when there are substantial quantities of units in process at the end of the period.
• C)because it merges costs from the prior period with the current period.
• D)as it is used by industries that do not experience significant cost changes.

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Definitions:

Operating Income

Earnings before interest and taxes (EBIT), representing the profits from a company's regular business operations excluding deductions of interest and taxes.

Revenue

The total amount of money received by a company for goods sold or services provided during a certain period.

Unearned Revenue

Income received by a company for services or products yet to be delivered or provided, often considered a liability until the service or product is delivered.

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