Some Companies That Use a Perpetual Inventory System and the Weighted

question 121

Multiple Choice

Some companies that use a perpetual inventory system and the weighted average cost flow assumption restate their inventories at year-end to the amount indicated by periodic weighted average cost procedures. The primary reason for this adjustment is that:

• A) Periodic weighted average cost often results in a higher valuation of inventory, thus reducing taxable income.
• B) This adjustment is necessary to record shrinkage losses.
• C) Periodic weighted average cost often results in a lower valuation of inventory, thus reducing taxable income.
• D) Periodic and perpetual costing procedures produce the same results if the year-end inventory has been counted properly. No adjustment would be needed.

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Definitions:

Pollution Free

A condition or process that does not emit harmful pollutants into the environment.

Housing Prices

The monetary value attributed to residential dwellings, often influenced by location, size, amenities, and market conditions.

Monopolies

Market situations in which a single company or entity has exclusive control over the supply of a particular good or service.

Positive Profits

Financial gain experienced by a business when the total revenue exceeds the total costs and expenses incurred in producing goods or services.