Multiple choice

Directions: Choose the correct option for the given question:

Average cost method of inventory valuation is suitable when

  1. price fluctuate

  2. prices rise

  3. prices fall

  4. can't say

  5. none of these
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A Correct answer
Explanation

The average cost method is most useful when prices fluctuate, as it smooths out the impact of price volatility by calculating a weighted average cost for inventory.

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