During Periods of Inflation Which Method Would Yield the Largest

question 135

Multiple Choice

During periods of inflation which method would yield the largest ending inventory and cost of goods sold?

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

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Definitions:

Estimated Cost

A projection or approximation of the cost associated with manufacturing a product or completing a project.

Net Realizable Value

The estimated selling price of goods minus any costs associated with their sale or disposal.

Merchandise

Goods that are bought and sold in the course of business, often referred to in the context of retail or wholesale trading.

Lower of Cost or Market

An accounting principle stating that inventory should be recorded at either its historical cost or its market value, whichever is lower.