If Prices Are Rising,which Inventory Cost Flow Method Will Produce

question 58

Multiple Choice

If prices are rising,which inventory cost flow method will produce the lowest amount of cost of goods sold?

• A)LIFO
• B)FIFO
• C)Weighted average
• D)LIFO,FIFO,and the weighted-average inventory cost flow methods will all produce equal amounts of cost of goods sold.

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Definitions:

Cost of Goods Sold

The costs directly connected to the manufacture of goods a firm sells, comprising materials and labor.

Accounts Receivable

Money owed to a business by its customers for goods or services delivered but not yet paid for.

Cost of Goods Sold

The direct expenses involved in producing the products a company sells, which cover both materials and labor.

Cash Cycle

The duration of time a company takes to convert its inventory and other resource inputs into cash flows from sales.