Which of the Following Variations of the Retail Inventory Method

question 10

Multiple Choice

Which of the following variations of the retail inventory method would generally result in the lowest cost-to-retail ratio in a period of declining prices?

• A)FIFO
• B)LIFO
• C)average cost
• D)lower of average cost or market

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Definitions:

Accumulated Depreciation

The total amount of depreciation expense that has been recorded against a fixed asset since it was put into use.

Cash Dividends

Distributions of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders in cash.

Equipment Sold

The process of disposing or selling business equipment, recorded as a transaction that may impact a company’s financial statements.

Prepaid Expense

An expense that has been paid in advance and is recorded as an asset until it is actually incurred.