GAAP does not require the cost flow assumption to conform to the actual physical flow of the goods.

Name: GAAP does not require the cost flow assumption to conform to the actual physical flow of the goods.
Brand: Quizplus
Rating: 4.8 (40 reviews)

Question

Quizplus · Accepted Answer

GAAP allows for the use of various cost flow assumptions, such as FIFO or LIFO, and does not require them to match the actual physical flow of goods. However, a company must be consistent in its use of the chosen cost flow assumption from period to period.

GAAP Does Not Require the Cost Flow Assumption to Conform