Which statement is correct about using a cost flow assumption?
A)An organization must use the same cost flow assumption as other organizations in its industry.
B)There is only one acceptable cost flow assumption under GAAP in Canada.
C)In Canada, organizations can use the FIFO or weighted average cost flow assumptions.
D)In Canada, organizations can use the FIFO, LIFO or weighted average cost flow assumptions.

Question

Quizplus · Accepted Answer

In Canada, organizations have the flexibility to choose between the FIFO (First-In, First-Out) or weighted average cost flow assumptions under GAAP (Generally Accepted Accounting Principles). There is no mandate to use the same cost flow assumption as other organizations in the industry, nor is there only one acceptable cost flow assumption. LIFO (Last-In, First-Out) is not commonly used or accepted under Canadian GAAP.

Which Statement Is Correct About Using a Cost Flow Assumption