Which Statement Is Correct About Cost Allocation Methods Under GAAP

question 151

Multiple Choice

Which statement is correct about cost allocation methods under GAAP?

• A)FIFO method expenses the oldest costs first.
• B)FIFO method has the oldest costs on the balance sheet.
• C)FIFO method has the most recent costs in the income statement.
• D)FIFO is not an acceptable cost allocation method.

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Definitions:

Rational Expectations School

An economic idea that assumes individuals make predictions about the future based on all available information and past experiences in a rational manner.

Monetary Policy

The process by which a central bank controls the supply of money in an economy, typically targeting inflation, employment, and economic growth.

Potential Level

The potential level of output, or potential GDP, is the maximum amount of goods and services an economy can produce when it is fully utilizing its resources, without causing inflation to rise.

Fixed-growth-rate Monetary Policy

A monetary policy framework aiming to maintain a predetermined rate of growth in the money supply.