A Company Should Not Change the Inventory Costing Method Each

question 186

True/False

A company should not change the inventory costing method each period in order to maximize net income.This is an example of the disclosure principle.

---

Definitions:

Sales

The transactions or operations involved in the selling of goods or services, resulting in revenue for the company.

Transfer Prices

Prices at which divisions of the same company transact with each other, often set to allocate revenues and expenses among various subunits of the company.

Variable Cost

Expenses that change in proportion to the business activity or production volume.

Profit Margin

A financial ratio indicating the percentage of revenue that exceeds the costs associated with making or buying the goods sold.