Companies are not allowed to report inventory costs by assuming which units of inventory are sold and which units still remain on hand.

Question

Quizplus · Accepted Answer

Companies are not allowed to assume which units of inventory are sold and which units still remain on hand. They must use an actual physical count of inventory on hand and record the cost of goods sold based on the actual units sold. However, companies can choose to use specific identification, FIFO, LIFO, or average cost methods to determine the cost of goods sold and the value of ending inventory.

Companies Are Not Allowed to Report Inventory Costs by Assuming