Question

Jamison Corporation's inventory cost in its balance sheet is lower using the first-in, first-out method than it would have been had it used the last-in, first-out method. Assuming no beginning inventory, what direction did the cost of purchases move during the period?

a) Up.
b) Down.
c) Unchanged.
d) Can't be determined.

Answer 1

The direction of the cost of purchases cannot be determined based on the given information.

Step-by-step explanation:

The direction that the cost of purchases moved during the period cannot be determined based on the given information. The question only provides information about the inventory cost on the balance sheet using different inventory valuation methods (first-in, first-out method and last-in, first-out method). It does not provide any information about the actual cost of purchases.