Question: For each statement that follows, identify the inventory cost formula that best fits the description, assuming a period of rising prices: (a) It results in

For each statement that follows, identify the inventory cost formula that best fits the description, assuming a period of rising prices:

(a)

It results in a balance sheet inventory amount that is closer to the replacement cost.

 select an inventory cost formula Weighted average costFIFOSpecific identification
(b)

It does a better job of matching recent costs against revenue.

 select an inventory cost formula Weighted average costSpecific identificationFIFO
(c)

It understates the value of the inventory on the balance sheet.

 select an inventory cost formula FIFOWeighted average costSpecific identification
(d)

It may overstate gross profit.

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