The Hometown Hardware store sells hardware supplies. After computing the ending inventory, the owners realized that their inventory is significantly higher than the replacement cost. Which inventory method will Hometown Hardware use to value their ending inventory?

INTRODUCTION TO COST ACCOUNTING

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Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]

A	Last In, First Out
B	First In, First Out
C	Weighted Average
D	Lower of Cost of Market

Explanation:

Detailed explanation-1: -The First-in, First-out (FIFO) inventory method results in Cost of goods sold valued at the most recent cost. 9. The matching principle requires that the cost of goods sold be matched against the ending merchandise inventory in order to determine income.

Detailed explanation-2: -Answer and Explanation: The inventory method that results in a cost of ending inventory that is close to the current cost of replacing the inventory is the FIFO method. FIFO stands for First In, First Out and will result in closing inventory values being closest to the most recently purchased inventory.

Detailed explanation-3: -Which of the following must be considered when applying the gross profit method? The inventory cost flow assumption used by the company. Conditions that may have changed the current year gross profit margin.

There is 1 question to complete.