Question

Given the same purchase and sales data, the three major costing methods for inventory will result in three different amounts for sales revenue.

Assume the cost of inventory is rising.

Required:

A. True

B. False

Answer 1

False. The amount for sales revenue doesn't change in three different prices given the purchase and sales data.

Step-by-step explanation:

Firs in, first out, last in, last out and average cost are the three major costing methods. And even though the cost of goods is directly linked to the product. The price is not defined by it, also the inventory cost is not going to change due to the price of sales. It is defined by external conditions. The final price of a product is defined by offer and demand. So in our case, the three major costing methods won't drive three different amounts of sale revenue if we analyze them with three different methods to calculate it.

Answer 2

The correct answer is False.

Step-by-step explanation:

This statement is false, because as much as the sales prices, the quantities sold and the income received from sales never change. For this reason it is considered that the cost of goods sold will always be different. It was taken into account that the price of the inventory increased.