In a Period of Rising Prices,the Use of Which of the Following

question 18

Multiple Choice

In a period of rising prices,the use of which of the following cost flow methods would result in the highest cost of goods sold?

• A)LIFO
• B)FIFO
• C)Weighted average cost
• D)Moving average cost

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Definitions:

Par Value

A nominal value assigned to a share of stock in the corporate charter, not necessarily related to its market value.

Acquisition Method

The accounting method used in consolidating the financial statements of a parent company and its subsidiaries, wherein the assets and liabilities of the subsidiary are measured at their fair values at the acquisition date.

Business Combination

A transaction or other event in which an acquirer gains control over one or more businesses.

Net Assets

The total assets of a company minus its total liabilities, representing the company's equity value.