The accounting principle that requires that the cost flow assumption be consistent with the physical movement of goods is
A) called the expense recognition principle.
B) called the consistency principle.
C) nonexistent; that is there is no accounting requirement.
D) called the physical flow assumption.

Question

Quizplus · Accepted Answer

There is no accounting principle that mandates the cost flow assumption to be consistent with the physical movement of goods. Accounting principles allow for different cost flow assumptions (e.g., FIFO, LIFO, average cost) that do not necessarily match the physical flow of inventory.

The Accounting Principle That Requires That the Cost Flow Assumption