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Which one of the following inventory methods is a gas station most likely to use? Specific...

Which one of the following inventory methods is a gas station most likely to use?

Specific identification

LIFO

FIFO

Average cost
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Answer #1
  • The correct answer is Option #4: Average Cost would be most suitable inventory methods in a gas station.
  • This is because its not feasible to apply specific identification method because one can not determine that gas filled to a customer is filled from the gas received on some specific date.
  • FIFO and LIFO are not applicable because of the same reason. Gas/Fuel when received is stored in a common tank and its not possible to say that when gas is sold to customer, it is sold from earlier purchases or from latest purchases.
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