Question

How should inventory be accounted for in a small boutique? Which method of inventory valuation (FIFO, LIFO, etc.) would be most appropriate?

A. FIFO (First-In, First-Out)
B. LIFO (Last-In, First-Out)
C. Weighted Average
D. Specific Identification

Answer 1

In a small boutique, inventory can be accounted using methods such as FIFO, LIFO, Weighted Average, or Specific Identification. The most appropriate method for a small boutique is FIFO.

Step-by-step explanation:

In a small boutique, inventory can be accounted for using various methods such as FIFO (First-In, First-Out), LIFO (Last-In, First-Out), Weighted Average, or Specific Identification.

For a small boutique, the most appropriate method of inventory valuation would depend on factors such as the nature of the products, the frequency of purchases, and the pricing strategy. However, a common method used in retail businesses like a boutique is FIFO (First-In, First-Out). This method assumes that the first items purchased are the first ones sold, which aligns with the natural flow of inventory in a retail setting.

By using FIFO, a small boutique can accurately track the cost of goods sold, monitor for possible spoilage or obsolescence, and value inventory in a more realistic manner.