Question

The three most common inventory cost flow assumptions are a.FIFO, retail, and specific identification b.FIFO, LIFO, and specific identification. c.FIFO, retail, and weighted average cost. d.FIFO, LIFO, and weighted average cost.

Answer 1

Answer:

Answer is D.

Explanation:

The inventory cost flow assumption states or explains that the cost of an inventory item changes from when it is acquired or built and when it is sold.

It should be understood that there are four generally accepted methods for assigning costs to ending inventory and cost of goods sold, these are

* specific cost

* average cost

*  first‐in, first‐out (FIFO)

* last‐in, first‐out (LIFO).

In summary, the inventory cost assumption are necessary to determine cost of goods sold and ending inventory.