Which of the Following Statements Is INCORRECT Regarding the Overriding

question 161

Multiple Choice

Which of the following statements is INCORRECT regarding the overriding objectives underlying inventory standards?

• A) Report an inventory cost on the statement of financial position that is representative of the inventory's recent cost.
• B) Choose an approach that corresponds as closely as possible to the physical flow of goods.
• C) Use the same method for all inventory assets that have similar economic characteristics.
• D) It is permissible under ASPE to use any inventory method, including LIFO.

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Definitions:

Cash Cycle

The period it takes for a company to convert its investments in inventory and other resources into cash flows from sales.

Inventory Turnover

A ratio showing how many times a company's inventory is sold and replaced over a period, often used to assess the efficiency of inventory management.

Accounts Receivable Turnover

A measure of how efficiently a company collects its outstanding credit sales, calculated as sales divided by average accounts receivable.

Accounts Payable Period

The amount of time it takes for a business to pay its suppliers after receiving goods or services, reflecting the company's payment policy towards its creditors.