CFA Practice Question

There are 520 practice questions for this study session.

CFA Practice Question

Which methods are based on cost flow assumptions?

I. Specific identification
II. FIFO
III. LIFO
IV. Weighted average cost
Correct Answer: II, III and IV

I is based on physical flow. The flow of costs does not have to correspond with the physical flow of units. The costs can flow differently than the goods. In other words, if a firm uses LIFO, it may sell the oldest (first) item to a customer, but can report the cost of goods sold of the price of the last purchase.

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