For Companies Using FIFO or Average Cost, Inventory Is Valued

question 47

Multiple Choice

For companies using FIFO or average cost, inventory is valued at:

• A) Net realizable value.
• B) Cost.
• C) Replacement cost.
• D) Lower of cost or net realizable value.

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Definitions:

Ending Inventory

Ending inventory is the total value of goods remaining in stock at the end of an accounting period, used to calculate cost of goods sold and gross profit.

Ending Inventory

The ultimate worth of merchandise up for sale at the termination of a fiscal period.

Overstated

A situation where the reported value or figures are higher than the true or accurate value, often unintentionally.

Cost of Goods Sold

The direct costs attributable to the production of goods sold by a company, including materials and labor.