An Assumption About Cost Flow Is Necessary

question 38

Multiple Choice

An assumption about cost flow is necessary

• A) because it is required by income tax regulations.
• B) only when the flow of goods cannot be determined.
• C) because prices usually change,and tracking which units have been sold is difficult.
• D) even when there is no change in the purchase price of inventory.

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Definitions:

Central Planning Agency

An organization responsible for directing economic activity according to a comprehensive plan, often in a centrally planned economy.

Business Firms

Entities that engage in commercial, industrial, or professional activities with the goal of generating profits for their owners or shareholders.

Equity

Ownership interest in a corporation in the form of common stock or preferred stock, representing a claim on its earnings and assets.

Efficiency

The ability to achieve maximum productivity with minimum wasted effort or expense, or the use of resources so as to maximize the production of goods and services.