In situations where there is a rapid turnover, an inventory method which produces a balance sheet valuation similar to the first-in, first-out method is
A) average cost.
B) base stock.
C) joint cost.
D) prime cost.

Question

Quizplus · Accepted Answer

The average cost method uses the weighted average cost of all units in inventory to determine the cost of goods sold and ending inventory. This results in a cost per unit that is similar to the cost of the first units purchased, making it comparable to the first-in, first-out method in situations with rapid turnover.

In Situations Where There Is a Rapid Turnover, an Inventory