Selection of an inventory cost formula by management should be influenced most by the
A)fiscal year end.
B)physical flow of goods.
C)goal of reporting inventory at its lowest cost.
D)Income tax effects.

Question

Quizplus · Accepted Answer

The physical flow of goods should be the primary consideration in selecting an inventory cost formula, as it provides a more accurate representation of the actual cost of goods sold and ending inventory. Other factors such as fiscal year end, reporting inventory at its lowest cost, and income tax effects may also be important but should not be the primary consideration.

Selection of an Inventory Cost Formula by Management Should Be