The choice of an inventory costing method can have a major impact on gross profit and cost of goods sold.

Question

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The inventory costing method can have a significant impact on gross profit and cost of goods sold because it determines the value assigned to inventory and the cost of goods sold. Different methods (such as LIFO, FIFO, and weighted average) can result in different values for inventory and cost of goods sold, which directly affect the calculation of gross profit. Therefore, the choice of inventory costing method is an important decision for businesses that can impact their financial statements and bottom line.

The Choice of an Inventory Costing Method Can Have a Major