If companies have identical inventoriable costs but use different inventory flow assumptions when the price of goods have not been constant, then the
A)cost of goods sold of the companies will be identical.
B)cost of goods purchased during the year will be identical.
C)ending inventory of the companies will be identical.
D)net income of the companies will be identical.

Question

Quizplus · Accepted Answer

The cost of goods purchased during the year will be identical because it is based on the actual purchase prices, which are the same for both companies. However, the cost of goods sold, ending inventory, and net income may differ due to different inventory flow assumptions like FIFO, LIFO, or weighted average.

If Companies Have Identical Inventoriable Costs but Use Different Inventory