Which of the Following Statements Is Correct When Inventory Unit

question 113

Multiple Choice

Which of the following statements is correct when inventory unit costs are increasing?

• A)LIFO will result in lower net income and a higher inventory valuation than will FIFO.
• B)LIFO will result in higher net income and lower inventory valuation than will FIFO.
• C)FIFO will result in lower net income and a lower inventory valuation than will LIFO.
• D)FIFO will result in higher net income and a higher inventory valuation than will LIFO.

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Definitions:

Cost of Goods Sold

The immediate expenses related to the manufacture of goods a company sells, which includes materials and labor.

Freight-In

The cost associated with transporting goods into a place of business, usually considered part of the inventory cost.

Credit Sales

Transactions where goods or services are sold by a business and payment is received at a later date.

List Prices

List prices refer to the advertised or official price of a product before any discounts or reductions are applied.