Which of the Following Combinations of Accounting Practices Will Lead $\text { Depreciation Method} \quad\quad \text {Inventory Method }$

question 71

Multiple Choice

Which of the following combinations of accounting practices will lead to the highest reported earnings in an inflationary environment? $\text { Depreciation Method} \quad\quad \text {Inventory Method }$
A. $\text { Straight-line } \quad \quad\quad\quad\quad\quad\text { LIFO }$
B. $\text { Double-declining balance } \quad \text { LIFO }$
C. $\text { Straight-line} \quad\quad\quad\quad\quad\quad\quad\text { FIFO}$
D. $\text { Double-declining balance } \quad \text { FIFO }$

• A)Option A
• B)Option B
• C)Option C
• D)Option D

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Definitions:

Raw Materials Purchases

refer to the acquisition of the basic inputs required to manufacture products; these materials have yet to be processed or used in production.

Raw Materials Available

Raw materials available refer to all the materials that are in stock and ready to be used in the production process at a given time.

Total Manufacturing Costs

The aggregate cost incurred in the production of goods, including raw materials, labor, and overhead expenses.

Direct Labor

The cost of labor that is directly involved in the production of goods or services.