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What is a key characteristic of the weighted average inventory method?
What is a key characteristic of the weighted average inventory method?
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Practice Questions
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Q1
What is a key characteristic of the weighted average inventory method?
It uses the oldest costs for inventory valuation.
It averages the cost of all inventory available for sale.
It prioritizes the most recent purchases.
It is only applicable for perishable goods.
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The weighted average method averages the cost of all inventory available for sale, providing a middle ground between FIFO and LIFO.
Questions & Step-by-step Solutions
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Q
Q: What is a key characteristic of the weighted average inventory method?
Solution:
The weighted average method averages the cost of all inventory available for sale, providing a middle ground between FIFO and LIFO.
Steps: 4
Show Steps
Step 1: Understand that the weighted average inventory method is used to calculate the cost of inventory.
Step 2: Know that this method takes into account the cost of all items in inventory.
Step 3: Realize that it averages the costs, rather than using the oldest (FIFO) or newest (LIFO) costs.
Step 4: Remember that this method provides a balanced approach to valuing inventory.
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