Changing the basis of inventory pricing from FIFO to average cost is an example of a(n)
A) extraordinary item.
B) change in accounting principle.
C) change in estimate
D) discontinued operation.

Question

Quizplus · Accepted Answer

Changing the basis of inventory pricing from FIFO (First-In, First-Out) to average cost is considered a change in accounting principle. This involves a fundamental change in the method used to account for inventory, requiring disclosure and sometimes retrospective application to previous financial statements for comparability.

Changing the Basis of Inventory Pricing from FIFO to Average