The Two Most Widely Used Methods for Determining the Cost

question 107

Multiple Choice

The two most widely used methods for determining the cost of inventory are

• A) FIFO and LIFO
• B) FIFO and average cost
• C) LIFO and average cost
• D) gross profit and average cost

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Definitions:

Stock Market Investor

An individual or entity that allocates capital with the expectation of receiving financial returns in the stock market.

Marginal Tax Rate

The tax rate that applies to the next dollar of taxable income; the percentage of tax applied to your income for each tax bracket in which you qualify.

Taxable Income

The amount of income that is subject to tax, after all allowable deductions, exemptions, and adjustments.

Average Tax Rate

The ratio of the total amount of taxes paid to the total income, showing the percentage of income paid in taxes.