A Company Provided the Following Disclosure Note to the Financial

question 6

Essay

A company provided the following disclosure note to the financial statements in its newest annual report:
During the current and prior year,the company reduced certain inventory quantities that were valued at lower LIFO costs prevailing in prior years.The effect of these physical reductions was to increase after-tax earnings this year by $90 million,$.30 per share,and $98 million,or $.327 per share last year.
1.Explain why the reduction in inventory quantity increased after-tax earnings for this company.
2.If the company had been using FIFO costing,would the reductions in inventory quantity during the two years have increased after-tax earnings? Explain.

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Definitions:

Humanistic Perspective

A view in psychology that emphasizes individual potential for growth and the role of unique perceptions in guiding behavior and mental processes.

School Psychologist

A professional who works within educational settings to address the psychological and academic needs of students.

Self-Concept

An individual's perception of self, including knowledge about oneself and beliefs about one's abilities, appearance, and personality.

Humanistic Psychologists

Psychologists specializing in the area of individual capabilities, underscoring the necessity of maturation and achieving self-fulfillment.