Which statement relating to the moving average method of costing inventories, used with the perpetual inventory system, is correct?
A) A new average cost is calculated after each sale.
B) A new average cost is calculated after each purchase.
C) A new average cost is calculated at the end of each month.
D) A new average cost is calculated after each sale and each purchase.

Question

Quizplus · Accepted Answer

A new average cost is calculated after each purchase in the moving average method used with the perpetual inventory system. This recalculated average cost is then used to value both the remaining inventory and the cost of goods sold until the next purchase occurs.

Which Statement Relating to the Moving Average Method of Costing