Which of the following statements is true?
A)The flow of inventory costs should match the physical flow of the merchandise.
B)Accounting standards require that merchandise costs be specifically traced to units left in inventory and to units that have been sold.
C)Accountants have developed methods which make assumptions concerning how costs should be assigned to inventory and cost of goods sold.
D)Alternative inventory cost-flow assumptions have the same effect on the amount of net income reported.

Question

Quizplus · Accepted Answer

Accountants have developed methods such as FIFO, LIFO, and average cost, which make assumptions about how costs should be assigned to inventory and cost of goods sold. These methods may not always match the physical flow of merchandise, but they are allowed under accounting standards. Alternative cost-flow assumptions can have a significant effect on the amount of net income reported.

Which of the Following Statements Is True