In an inflationary economic environment, the selling price set for a firm's products will:
A)not be affected by the cost flow assumption used.
B)be higher if LIFO is used than if FIFO is used.
C)be higher if FIFO is used than if LIFO is used.
D)be derived from the weighted average cost of inventory.

Question

Quizplus · Accepted Answer

In an inflationary environment, the cost flow assumption (LIFO, FIFO, or weighted average) affects the cost of goods sold and inventory valuation but does not directly affect the selling price set for products. The selling price is typically determined by market conditions, demand, and competition, not the inventory accounting method.

In an Inflationary Economic Environment, the Selling Price Set for a Firm's