Under the FIFO Method Sales Returns Are Costed Back into Inventory

question 26

Multiple Choice

Under the FIFO method sales returns are costed back into inventory at:

• A) the original cost price that was attached to the original sale.
• B) an average cost price.
• C) a price determined by the accountant.
• D) the most recent cost price attached to a sale.

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Definitions:

Income Statement Accounts

Accounts used to record transactions affecting a company’s income, expenses, and the resulting net income or loss over a period of time.

Balance Sheet Accounts

Categories within the balance sheet that include assets, liabilities, and shareholders' equity, each of which is essential for showcasing the company's financial health.

Natural Business Year

A fiscal year that ends when a business's sales activities are at their lowest point, facilitating easier inventory and activity analysis.

12-month Period

A 12-month period typically refers to a full year, used in financial reporting and analysis to compare performance or changes over the span of a year.