Which of the following should a business consider when choosing between the FIFO and average cost formulas?
A)whether the method closely follows the physical flow of goods
B)whether the method reports an inventory cost that approximates recent cost
C)using the same method for inventory of similar nature and use
D)all of the above.

Question

Quizplus · Accepted Answer

All of the listed factors are important considerations for a business when choosing between the FIFO (First-In, First-Out) and average cost formulas for inventory accounting. Each factor impacts how inventory costs are reported and can affect financial statements and tax liabilities.

Which of the Following Should a Business Consider When Choosing