Which of the following statements is false regarding an assumption of inventory cost flow?
A) The cost flow assumption need not correspond to the actual physical flow of goods.
B) The assumption selected may be changed each accounting period.
C) The FIFO assumption uses the earliest acquired prices to cost the items sold during a period.
D) The LIFO assumption uses the earliest acquired prices to cost the items on hand at the end of an accounting period.

Question

Quizplus · Accepted Answer

The cost flow assumption selected by a company should be consistently applied from one accounting period to the next to ensure comparability of financial statements over time. Changing the assumption each period is not generally allowed under accounting principles.

Which of the Following Statements Is False Regarding an Assumption