In a Period of Rising Prices, a Company Is Most

question 118

Multiple Choice

In a period of rising prices, a company is most likely to use the specific cost identification method of pricing inventory if:

• A) Each item in the inventory is unique.
• B) Management wants the same unit cost assigned to items sold and items remaining in inventory.
• C) Management's primary objective is to minimize income taxes.
• D) Management wants the company's income statement to indicate the highest possible amounts of gross profit and profit for the period.

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Definitions:

Money Market Instrument

Short-term debt instruments, typically with maturities of less than one year, traded in the money market, including treasury bills, commercial paper, and certificates of deposit.

Maturity

The expiration date of a financial instrument, at which point the principal is to be paid back to investors.

Emerging Market Country

Refers to a nation with social or business activity in the process of rapid growth and industrialization.

Brazil

A South American country known for its diverse culture, rainforest, and large economy, also a significant player in global agricultural and energy markets.