3

Cal Produce Inc. purchases fresh produce from area farms and sells it directly to grocery stores. Choose the correct statement about the cost flow assumption (in ALL CAPS in the answer alternatives) to be chosen by Cal Produce. This question considers only AVE, LIFO, and FIFO assumptions FIFO would yield results most similar to the actual flow of goods O FIFO must be used because the goods are very perishable O AVE method yields lower cost of goods sold than FIFO when inventory costs are increasing O LIFO could be used for tax purposes while FIFO could be used for financial reporting O LIFO cannot be used