If companies have identical inventory costs but use different inventory flow assumptions when the price of goods have not been constant, then the
A) cost of goods sold of the companies will be identical.
B) cost of goods available for sale of the companies will be identical.
C) ending inventory of the companies will be identical.
D) net income of the companies will be identical.

Question

Quizplus · Accepted Answer

The cost of goods available for sale will be identical because it is determined by the total cost of inventory purchased, which is the same for both companies. However, different inventory flow assumptions (like FIFO, LIFO, or weighted average) will affect the cost of goods sold, ending inventory, and net income.

If Companies Have Identical Inventory Costs but Use Different Inventory