The cost flow method chosen must match the actual physical flow of the goods.

Name: The cost flow method chosen must match the actual physical flow of the goods.
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Question

Quizplus · Accepted Answer

The cost flow method (such as FIFO, LIFO, or weighted average) used for accounting purposes does not need to match the actual physical flow of goods. Businesses can choose the method that best suits their financial reporting objectives, regardless of how the goods physically move through the inventory.

The Cost Flow Method Chosen Must Match the Actual Physical