Which inventory valuation model serves as a middle-of-the-road approach for taxes and income?

Question

Quizplus · Accepted Answer

The average-cost inventory valuation model serves as a middle-of-the-road approach for taxes and income because it averages the costs of all units in inventory, resulting in an average cost per unit. This method provides a fair balance between the costs of newer and older inventory items, making it a good choice for companies that have a steady and consistent flow of inventory. It is also easy to use and calculate, which makes it a popular choice for many small businesses. However, it may not be the best choice for companies that deal with a lot of high-value, unique or custom-made inventory items.

Which Inventory Valuation Model Serves as a Middle-Of-The-Road Approach for Taxes