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What is the main advantage of using the weighted average method for inventory va

Practice Questions

Q1
What is the main advantage of using the weighted average method for inventory valuation?
  1. Simplicity
  2. Tax benefits
  3. Accuracy
  4. Compliance with GAAP

Questions & Step-by-Step Solutions

What is the main advantage of using the weighted average method for inventory valuation?
  • Step 1: Understand that the weighted average method is a way to calculate the cost of inventory.
  • Step 2: Know that this method averages the cost of all items in inventory.
  • Step 3: Realize that it simplifies calculations by using one average cost for all items instead of tracking each item's cost separately.
  • Step 4: Recognize that this simplicity makes it easier to determine the cost of goods sold and the value of remaining inventory.
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