Which of the following is NOT a common cost flow assumption used in costing inventory under either the perpetual or periodic inventory systems?

• A. Specific Identification
• B. Weighted Average Depreciation
• C. Last-In, First-Out (LIFO)
• D. First-In, First-Out (FIFO)

Answer: (B)

Verified step by step guidance

1. Understand the concept of cost flow assumptions: Cost flow assumptions are methods used to allocate costs to inventory and cost of goods sold. They are essential in inventory accounting under both perpetual and periodic inventory systems.
2. Review the common cost flow assumptions: The most widely used cost flow assumptions include Specific Identification, Weighted Average, Last-In, First-Out (LIFO), and First-In, First-Out (FIFO). Each method has its own way of determining the cost of inventory sold and remaining.
3. Analyze the options provided: Specific Identification, Weighted Average, LIFO, and FIFO are all valid cost flow assumptions. However, Weighted Average Depreciation is not a recognized cost flow assumption. Depreciation pertains to the allocation of the cost of fixed assets over their useful lives, not inventory costing.
4. Clarify the distinction: Weighted Average is a valid inventory costing method, but Weighted Average Depreciation is unrelated to inventory costing. This distinction is key to identifying the correct answer.
5. Conclude the reasoning: Based on the analysis, Weighted Average Depreciation is NOT a common cost flow assumption used in costing inventory under either the perpetual or periodic inventory systems.