Which Inventory Method Generally Best Follows the Matching Principle

question 16

Multiple Choice

Which inventory method generally best follows the matching principle?

• A)Average-cost
• B)LIFO
• C)Whichever method is used for tax purposes
• D)FIFO

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Definitions:

Large Purchases

Transactions involving the acquisition of a substantial volume of goods or services, often resulting in economies of scale or bulk discounts.

Innovative

Relating to the introduction of new ideas, methods, or products.

Demand Elasticity

An indicator of the extent to which the demand for a product or service shifts as a result of variations in its price.

Locking in Customers

Refers to strategies used by companies to retain customers, often through the use of long-term contracts, proprietary technology, or loyalty programs.