Which of the following should a business consider when choosing between the FIFO and average cost formulas?
A)Whether the method closely follows the physical flow of goods
B)Whether the method reports an inventory cost that approximates recent cost
C)Using the same method for inventory of similar nature and use
D)All of the above.

Question

Quizplus · Accepted Answer

A business should consider all of these factors when choosing between FIFO and average cost formulas. FIFO closely follows the physical flow of goods, average cost approximates recent cost, and using the same method for inventory of similar nature and use promotes consistency and accuracy in financial reporting.

Which of the Following Should a Business Consider When Choosing