Which one of the following statements is true?
A) Accountants have developed methods which make assumptions concerning how costs should be assigned to inventory and cost of goods sold.
B) Alternative inventory cost flow assumptions have the same effect on the amount of net income reported.
C) Accounting standards require that merchandise costs be specifically traced to units left in inventory and to units that have been sold.
D) The flow of inventory costs should match the physical flow of the merchandise.

Question

Quizplus · Accepted Answer

Accountants have developed methods such as specific identification, first-in, first-out (FIFO), last-in, first-out (LIFO), and weighted average which make assumptions regarding the flow of costs to inventory and cost of goods sold. These methods may have different effects on net income depending on the cost of inventory and the order in which it was purchased.

Which One of the Following Statements Is True