Which cost formula provides the better (1) statement of income and (2) statement of financial position valuations, respectively?

A) (1) average and (2) FIFO
B) (1) FIFO and (2) average
C) (1) FIFO and (2) FIFO
D) (1) average and (2) average

Question

Robert Bianco · Accepted Answer

Final Answer : A, Explanation :  FIFO provides a better statement of income as it matches older costs with current revenues, reflecting current market conditions. Average cost provides a more stable and representative valuation for the statement of financial position by smoothing out price fluctuations.

Which cost formula provides the better (1) statement of income and (2) statement of financial position valuations, respectively?

A) (1) average and (2) FIFO
B) (1) FIFO and (2) average
C) (1) FIFO and (2) FIFO
D) (1) average and (2) average

Definitions

Learning Objectives

Learning Objectives

Related questions

Which cost formula provides the better (1) statement of income and (2) statement of financial position valuations, respectively?A) (1) average and (2) FIFOB) (1) FIFO and (2) averageC) (1) FIFO and (2) FIFOD) (1) average and (2) average

Definitions

Learning Objectives

Learning Objectives

Related questions

Which cost formula provides the better (1) statement of income and (2) statement of financial position valuations, respectively?

A) (1) average and (2) FIFO
B) (1) FIFO and (2) average
C) (1) FIFO and (2) FIFO
D) (1) average and (2) average