In assigning a cost to ending inventory, the cost flow has to follow the physical flow.

Name: In assigning a cost to ending inventory, the cost flow has to follow the physical flow.
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Quizplus · Accepted Answer

The cost flow assumption in accounting does not need to match the physical flow of goods. Companies can choose from several methods (e.g., FIFO, LIFO, average cost) to assign costs to ending inventory, independent of the actual physical movement of products.

In Assigning a Cost to Ending Inventory, the Cost Flow