Question

Ending inventory consists of 45 units:

a) May be inaccurate
b) Should match sales
c) Matches beginning inventory
d) Depends on the accounting method

Answer 1

The ending inventory figure depends on the accounting method used.

Step-by-step explanation:

The subject of this question is Business and the grade level is High School.

The correct answer is d) Depends on the accounting method. Ending inventory can vary depending on the chosen accounting method, such as LIFO (last in, first out) or FIFO (first in, first out). These methods can result in different inventory valuations and therefore affect the ending inventory figure.

For example, if a company uses the LIFO method, the cost of the most recent units purchased is assigned to the ending inventory. On the other hand, if the company uses the FIFO method, the cost of the oldest units purchased is assigned to the ending inventory. Thus, the ending inventory can differ based on the accounting method.