The Computation of Equivalent Units Under the FIFO Method

question 4

Multiple Choice

The computation of equivalent units under the FIFO method:

• A)treats units in the beginning work in process inventory as if they were started and completed during the current period.
• B)treats units in the beginning work in process inventory as if they represent a separate batch of goods separate and distinct from goods started and completed during the current period.
• C)treats units in the ending work in process inventory as if they were started and completed during the current period.
• D)ignores units in the beginning and ending work in process inventories.

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Definitions:

Cash Held

Physical money held by a business in its cash registers or cash box, used for daily operations.

Present Value

The present-day valuation of coming monetary sums or cash flow sequences, upon applying a defined rate of return.

Compounded Annually

The process wherein the interest earned on an investment is added to the principal each year, and in the subsequent year, interest is earned on this new principal.

Market Rate

The prevailing price or interest rate available in the marketplace for goods, services, or securities at a given time.