The client determines the cost of inventory at year-end using
A)LIFO,FIFO,or actual cost
B)FIFO,LIFO,or incurred cost
C)FIFO,LIFO,or average cost
D)FIFO,LISH,or average cost

Question

Quizplus · Accepted Answer

FIFO (first-in, first-out), LIFO (last-in, first-out), and average cost are three common methods of determining the cost of inventory. Actual cost and incurred cost are not valid methods of determining the cost of inventory. Among the three choices given, FIFO, LIFO, and average cost, the most commonly used method is average cost, which calculates the cost of goods sold as an average of the cost of all items in inventory, regardless of when they were purchased or produced. This method tends to smooth out fluctuations in the cost of goods sold and helps companies avoid drastic increases or decreases in their inventory value.

The Client Determines the Cost of Inventory at Year-End Using