Question

Which inventory cost flow assumption is commonly used internally by companies that externally report under the LIFO cost flow assumption?

A- LIFO
B- FIFO
C- Weighted-average

Answer 1

The inventory cost flow assumption commonly used internally by companies that externally report under the LIFO cost flow assumption is the Weighted-average method.

Step-by-step explanation:

The inventory cost flow assumption commonly used internally by companies that externally report under the LIFO cost flow assumption is the Weighted-average method.

Under the Weighted-average method, the cost of goods sold and ending inventory value are calculated by taking into account the average cost of all units available for sale during a period.

This method is commonly used internally because it simplifies the calculations by avoiding the need to track the exact cost of each individual unit sold.