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متابعة

Which one of the following inventory cost flow assumptions will result in a higher inventory turnover ratio in an inflationary economy ?

A. Weighted average.

B. FIFO.

C. LIFO.

D. Specific identification.

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تم إضافة السؤال من قبل مستخدم محذوف‎
تاريخ النشر: 2015/08/30
Alhassan Shaibu
من قبل Alhassan Shaibu , Data Entry Clerk (Contract) , Pilgrim Affairs Office of Ghana (Ghana Hajj Board)

C. Last In First Out (LIFO) Method

Sadiq ul Islam
من قبل Sadiq ul Islam , Financial Controller , BinDawood Holding Company (BDH)

C) LIFO will be correct answer.

I believe by using LIFO, Inventory valuations will be lesser than other inventory valuation methods in inflationary economy (e.g. FIFO, weighted/Moving average or specific identification) and COGS will be higher. This situation will consequently impact in higher inventory Turnover by using formula of COGS/ Inventory.

 

Hashim Nadir
من قبل Hashim Nadir , Chief Accountant , Burhani Computers Trading llc

Weighted average will help in high turnover ratio as it will show average profit which increase as per the cost of production variation

Moses Tindibale
من قبل Moses Tindibale

Probably i prefer FIFO,SINCE ITS MORE EFFICIENCY AND EASY TO OPERATE.

 

Sohail Lone
من قبل Sohail Lone , Assistant Manager Audit , Deloitte - United Arab Emirates

B) FIFO: It will  produce lower CGS and higher Net income

Mohammad Rashedul Haque Rashed
من قبل Mohammad Rashedul Haque Rashed , Head , Murshid Mahbub

Answer............D. Specific identification

AYOOB BASHA HAWALDAR
من قبل AYOOB BASHA HAWALDAR , Accountant - Cost , AL Hasawi Industrials Group W.L.L

C.  LIFO - for manufacture Co.

D. Specific identification -for Trading

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