The applicable financial reporting framework allows the audit client to determine both the cost and market value of inventory.Select the correct item(s)from the following list regarding these determinations:
A)The client must use FIFO to determine the cost of inventory at year-end.With FIFO,the client determines the cost of good sold using the earliest inventory items purchased.
B)The client must use FIFO to determine the cost of inventory at year-end.With FIFO,the client determines the cost of good sold using the latest inventory items purchased.
C)The client can choose to use either FIFO or average cost to determine the cost of inventory at year-end (in the U.S.LIFO can also be used to determine the cost of inventory).
D)The client determines the market value of inventory by estimating the amount the sales price of inventory at the end of the year.

Question

Quizplus · Accepted Answer

The applicable financial reporting framework allows the client to choose either FIFO or average cost to determine the cost of inventory at year-end. In the U.S., LIFO can also be used. The client must compare the cost and market value of inventory and use the lower value as the basis for reporting the inventory on the balance sheet. The client determines the market value of inventory by estimating the amount that it would sell for in the normal course of business, less disposal costs.

The Applicable Financial Reporting Framework Allows the Audit Client to Determine