The Difference Between the FIFO, LIFO, and Average Cost Methods

question 124

True/False

The difference between the FIFO, LIFO, and average cost methods is that each of these methods of inventory costing makes a specific assumption about the flow of costs.

---

Definitions:

Limited Liability

A legal structure that limits the financial liability of the owners to the amount of money they invested in the company.

Corporate Form

A legal structure for a business recognized by law as a separate legal entity from its owners, with its own rights and liabilities distinct from those of its owners.

Owner-Operated

Refers to a business where the owner actively manages and operates the company, often involved in daily tasks and decisions.

Portfolio

A collection of investments held by an individual or institution which may include stocks, bonds, real estate, and other assets.