Which Inventory Costing Method Might Allow a Company to Manipulate

question 52

Multiple Choice

Which inventory costing method might allow a company to manipulate income by making significant inventory purchases at year end?

• A)FIFO
• B)LIFO
• C)Specific identification
• D)Weighted average cost

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Definitions:

Debit Memorandum

A document issued by a buyer to a seller indicating returned goods or a request for a price reduction, increasing the buyer's accounts payable.

Sales Returns and Allowances

A reduction in sales revenue for returned goods or provided allowances due to dissatisfaction or defects.

Merchandise Inventory

Goods that a merchandising company holds for the purpose of resale to customers in the ordinary course of business.

Freight Charges

Costs associated with transporting goods from one place to another, typically paid by the buyer or seller depending on the shipping terms.