Which of the Following Statements Is True

question 79

Multiple Choice

Which of the following statements is true?

• A)The flow of inventory costs should match the physical flow of the merchandise.
• B)Accounting standards require that merchandise costs be specifically traced to units left in inventory and to units that have been sold.
• C)Accountants have developed methods which make assumptions concerning how costs should be assigned to inventory and cost of goods sold.
• D)Alternative inventory cost-flow assumptions have the same effect on the amount of net income reported.

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Definitions:

Profit-Maximizing Output

The level of production at which a firm achieves the highest possible profit, where marginal revenue equals marginal cost.

X-Inefficiency

A concept where a firm operates with higher costs than are necessary due to lack of competition or internal inefficiencies.

Economies Of Scale

Cost savings that accrue to firms from upscaling their production operations, where there's a typical decrease in the cost per unit with larger production volumes.

Average Cost

The sum of all production expenses divided by the quantity of items made, showing the expense for each unit of product.