Which of the Following Is Not True Regarding the Use

question 26

Multiple Choice

Which of the following is not true regarding the use of the first-in first-out (FIFO) method of valuing inventory?

• A)Cost of sales is assumed to consist of the weighted average of the goods acquired
• B)The most recent goods acquired are assumed to be included in closing inventory
• C)The earliest goods acquired are assumed to comprise closing inventory
• D)Cost of sales is assumed to consist of the most recent goods acquired

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Definitions:

Indirect Method

An approach to preparing the cash flow statement where net income is adjusted for changes in balance sheet accounts to calculate cash from operating activities.

Operating Activities

The section of a business's cash flow statement that accounts for its core business operations' cash inflows and outflows, involving receipts from sales, payments to suppliers, and payroll.

Prepaid Expenses

Costs that have been paid in advance for goods or services to be received in the future, recorded as an asset on the balance sheet.

Net Income

The remaining profit after deducting all operating expenses, taxes, and additional costs from the total revenue.