Which of the Four Inventory Approaches Is Best Suited to Inventories

question 52

Multiple Choice

Which of the four inventory approaches is best suited to inventories of high-priced,low-volume items?

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

---

Definitions:

Purchase Goods

The act of buying products or commodities for use or consumption, often in exchange for money.

Value of Money

The purchasing power of money, which indicates how much goods and services money can buy; often influenced by inflation.

Velocity

In the context of economics, velocity refers to the rate at which money circulates in the economy, moving from one transaction to another.

Real Output

The total value of all goods and services produced by an economy, adjusted for price changes or inflation, representing the actual physical output.