The selection of an appropriate inventory cost flow assumption for an individual company is made by
A) the external auditors.
B) the SEC.
C) the internal auditors.
D) management.

Question

Quizplus · Accepted Answer

The selection of an appropriate inventory cost flow assumption for an individual company is ultimately the responsibility of management. Management must consider factors such as the nature of the company's business, the types of inventory being sold, and the impact of the chosen cost flow method on the financial statements. While external auditors may review and provide recommendations on the appropriateness of the chosen method, ultimately it is management's responsibility to ensure accurate financial reporting. The SEC and internal auditors also may play a role in oversight, but the ultimate decision rests with management.

The Selection of an Appropriate Inventory Cost Flow Assumption for an Individual