Which of the Following Statements About the Use of the Weighted

question 28

Multiple Choice

Which of the following statements about the use of the weighted average assumption is true?

• A) The balance sheet figure is between the LIFO and FIFO figures.
• B) When prices are rising,it shows lower balance sheet figures than the LIFO method.
• C) When prices are falling,it shows lower balance sheet figures than the FIFO method.
• D) None of the answers provided.

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Definitions:

FIFO

"First In, First Out," an inventory valuation method where goods first bought are the first ones sold, affecting the cost of goods sold and inventory on financial statements.

Ending Inventory

The total value of a company's merchandise, raw materials, and finished and unfinished products which have not yet been sold at the end of an accounting period.

Perpetual Inventory System

An accounting method that records inventory purchases and sales in real time, providing a continuous account of inventory levels.