Question

Which of the following statements is false regarding an assumption of inventory cost flow?a. The cost flow assumption need not correspond to the actual physical flow of goods.b. The assumption selected may be changed each accounting period.c. The FIFO assumption uses the earliest acquired prices to cost the items sold during a period.d. The LIFO assumption uses the earliest acquired prices to cost the items on hand at the end of an accounting period.

Answer 1

Answer: ".b. The assumption selected may be changed each accounting period." IS FALSE regarding an assumption of inventory cost flow.

Explanation: When using an inventory cost flow assumption, we can choose between using the FIFO, LIFO, Weighted Average, or specific identification method, but the method CANNOT be changed in each accounting period.