How Competitors Calculate Inventory Cost Is Least Likely to Affect

question 92

Multiple Choice

How competitors calculate inventory cost is least likely to affect comparisons between competitors if inventory makes up a:

• A)large percent of assets and inventory costs are stable.
• B)large percent of assets and inventory costs are not stable.
• C)small percent of assets and inventory costs are not stable.
• D)small percent of assets and inventory costs are stable.

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Definitions:

Net Change

Net Change refers to the difference in a financial instrument's closing price between two consecutive trading sessions.

Cash Flows

The total amount of money being transferred into and out of a business, especially as affecting liquidity.

Income Recognition

The accounting principle that revenue should only be recognized after the business has fulfilled its obligations and the payment is certain.

Direct Method

A method for creating a cash flow statement where actual cash flow information from operations is used rather than adjustments to net income.