In a perpetual inventory system,an inventory cost flow assumption is used primarily for determining which costs to use in:
A)Recording purchases of inventory.
B)Recording the cost of goods sold.
C)Recording sales revenue.
D)Forecasts of future operating results.

Question

Quizplus · Accepted Answer

In a perpetual inventory system, inventory cost flow assumption is used primarily for determining the cost of goods sold, which is a key component of a company's income statement. Recording purchases of inventory and sales revenue are straightforward and do not require the use of cost flow assumptions. Forecasts of future operating results may take into consideration past cost flow assumptions, but the primary purpose is not for determining future results.

In a Perpetual Inventory System,an Inventory Cost Flow Assumption Is