Which of the Following Statements Is True of Process Costing

question 56

Multiple Choice

Which of the following statements is true of process costing?

• A) In the period of rising prices, weighted-average process-costing method will result in higher operating income as compared to FIFO process-costing method.
• B) The operating income and the income tax liability of a company are not affected by the method of process-costing being followed by the company.
• C) In the period of rising prices, weighted-average process-costing method will result in lower cost of goods sold as compared to FIFO process-costing method.
• D) In a period of falling prices, weighted-average process-costing method will result in a higher income tax liability as compared to FIFO process-costing method.

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Definitions:

Disaffirm

The legal act of denying, rejecting, or invalidating a contract or agreement.

Fair Market Value

The price at which an asset would sell in a competitive auction setting, reflecting the value agreed upon by a willing buyer and seller.

Restatement of Contracts

A collection of legal principles regarding contracts, intended to clarify and synthesize current contractual laws in the United States.

Mental Impairment

A condition that impacts an individual's cognitive functioning, potentially affecting memory, decision-making, or learning abilities.