Which of the following statements is correct?
A)Specific identification is the most practical,but least accurate,measure of cost and net income.
B)When unit costs are increasing,the weighted average cost method yields a cost of goods sold between that of FIFO and LIFO.
C)FIFO will lead to the highest net income if unit costs are falling.
D)LIFO will always yield a smaller net income than FIFO.

Question

Quizplus · Accepted Answer

Specific identification assigns costs to ending inventory and cost of goods sold by tracking and identifying each specific item of inventory.Weighted average is a middle-of-the-road method.When unit costs are falling,FIFO produces a higher cost of goods sold (resulting in a lower gross profit and a lower net income)when compared to LIFO.On the other hand,when unit costs are rising,FIFO produces a lower cost of goods sold (resulting in a higher gross profit and a higher net income)when compared to LIFO.

Which of the Following Statements Is Correct