The Use of LIFO Rather Than FIFO for Inventory Costing

question 67

Multiple Choice

The use of LIFO rather than FIFO for inventory costing under normal economic conditions results in:

I. lower net income.
II. higher total assets.
III. higher retained earnings.
IV. unchanged retained earnings.

• A)II and III
• B)I, II, and IV
• C)I only
• D)I and IV

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Definitions:

Investment Grade

A rating that indicates a bond or other security is considered low risk by rating agencies, making it an attractive investment for conservative investors.

Yield To Maturity

The total return anticipated on a bond if it is held until the maturity date, considering all interest payments and the principal.

Investor

An individual or entity that allocates capital with the expectation of receiving financial returns, often involving equity ownership, debt purchases, or other financial instruments.

Called Bonds

Bonds that have been redeemed before their maturity date by the issuer, usually at a predefined call price.