Ace Company is a retailer operating in an industry that experiences inflation (rising prices). Ace wants the most realistic net income. Which inventory costing method should Ace consider using?

Which of the following would not be considered a merchandising operation?

Service firm

Retailer

Wholesaler

Merchandising company

An assumption about cost flow is necessary

even when there is no change in the purchase price on inventory.

only when the flow of goods cannot be determined.

because prices usually change, and tracking which units have been sold is difficult.

because it is required by the income tax regulation.

Ace Company is a retailer operating in an industry that experiences inflation (rising prices). Ace wants the most realistic net income. Which inventory costing method should Ace consider using?

LIFO because cost of goods sold represents the latest costs.

FIFO because cost of goods sold represents the earliest costs.

Average because all inventory costs will then represent an average amount.

Specific identification is the most realistic method because it involves the actual costs.

Manufacturers usually classify inventory into all the following general categories except:

work in process.

finished goods.

merchandise inventory.

raw materials.