Which of the Following Statements Is Correct

question 9

Multiple Choice

Which of the following statements is correct?

• A) The periodic method of accounting for inventory will always result in a higher closing inventory balance than the perpetual method.
• B) The periodic method of accounting for inventory will always result in a lower closing inventory balance than the perpetual method.
• C) Closing inventory will always be the same under the periodic and perpetual methods.
• D) the relationship between the closing inventory balance under the periodic and perpetual methods will depend on whether the FIFO or weighted average method is used to value inventory.

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Definitions:

August Sales

The total sales revenue generated by a business during the month of August.

Capital Expenditures

Long-term investments made by a company in buildings, equipment, or other assets to improve or maintain its operations.

Direct Materials Purchases

Expenditures for raw materials that are directly traceable to the manufacturing of a product and are a significant part of the production process.

Fixed Assets

Long-term tangible assets held for business use and not expected to be converted to cash in the short term.