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If an entity uses the continuous weighted average cost method to value closing inventory,
Which of the following statements is true?
A Unit average cost is recalculated each time there is a purchase of inventory
B Unit average cost is calculated once only at the end of an accounting period
C Unit average cost is recalculated each time there is a sale of goods
D Unit average cost is recalculated each time there is a purchase or a sale
kit says the answer is A.
But I think the answer is C. We calculate cost per unit in continuous weighted average, each time there is a sale of goods
please correct me sir, if I’m wrong
The answer is indeed A.
The cost is recalculated every time there is a new purchase. It is only when there is new purchase that the cost is going to be different.
Have you watched my free lectures on this?