Question

Which of the following methods are available for costing inventory?

A- Simple-average
B- NIFO
C- Specific identification
D- FIFO
E- Weighted-average
F- LIFO

Answer 1

Inventory costing methods include specific identification, FIFO, LIFO, and weighted-average. Simple-average is not a standard inventory costing method, and NIFO is not recognized as such.

Step-by-step explanation:

The question asked about the available methods for costing inventory. There are several common methods used for inventory costing:

• Specific identification: This method tracks the cost of each individual item in inventory.
• FIFO (First-In, First-Out): Assumes that the first items purchased are the first ones sold, and costs are based on those purchase prices.
• LIFO (Last-In, First-Out): Assumes that the most recently purchased items are the first to be sold, with costs based on the latest purchase prices.
• Weighted-average: Costs are based on the average cost of all units available during the period, weighted by the number of units.

The methods not applicable or incorrectly listed in the question are:

• Simple-average: This is not a standard method for costing inventory.
• NIFO: This does not appear to be a recognized inventory costing method.