Pollet Company Started Business at the Beginning of 2012

question 89

Multiple Choice

Pollet Company started business at the beginning of 2012. Pollet selected the FIFO method for its inventory costing. The profits will maximize for 2012 under this method, in a period of:

• A) rising prices.
• B) declining prices.
• C) stable prices.
• D) prices fluctuating up and down at the same amount consistently throughout the year.

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Definitions:

Material Amount

A sum of money that is large enough to influence decisions or the perception of a company's financial performance.

Sole Proprietorship

A business structure where a single individual owns and operates the business, bearing full responsibility for its debts and obligations.

Hybrid Method

An accounting approach that combines elements of both the cash basis and accrual basis methods for financial reporting.

Deductible Expenses

Expenses eligible to reduce taxable income, subject to various tax rules and limitations.