Which of the following statements is correct?
A)The choice of an inventory costing method is dependent upon the actual physical flow of the goods in inventory.
B)LIFO should be used during a period of increasing unit costs when the objective is to maximize the ending inventory value on the balance sheet.
C)FIFO should be used during a period of decreasing unit costs when the objective is to maximize the gross profit reported on the income statement.
D)The average cost method will result in an ending inventory balance which is somewhere between LIFO and FIFO when inventory unit costs are changing.

Question

Quizplus · Accepted Answer

The average cost method smooths out price fluctuations, resulting in an ending inventory value that typically falls between the values calculated using LIFO and FIFO when costs are changing.

Which of the Following Statements Is Correct