Jasper Owns a Small Retail Store as a Sole Proprietor

question 17

Multiple Choice

Jasper owns a small retail store as a sole proprietor.The business records show that the cost of the store's inventory items has been steadily increasing.The cost of the end of the year inventory is $200,000 and the cost of the beginning of the year inventory was $250,000.Jasper uses the FIFO method of inventory valuation.Which of the following statements is true?

• A)Jasper purchased more inventory during the year than he sold during the same one-year period.
• B)Jasper would have a higher net income if he used the LIFO method of inventory valuation instead of the FIFO method.
• C)Jasper has apparently decreased the volume of items in his ending inventory as compared to the number of items in his beginning inventory.
• D)Since the cost of the store's inventory items is increasing, Jasper will have a greater cost of goods sold figure under FIFO than LIFO.
• E)None of the above.

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Definitions:

Addicts

Individuals who have developed a dependency on substances or behaviors that significantly impair their health or social functioning.

Cross-elasticity of Demand

A measure of how the quantity demanded of one good responds to a change in the price of another good, indicating substitutes or complements.

Normal Goods

Items for which demand increases as consumer income rises, showing a positive correlation between income and demand.

Law of Supply

A fundamental principle stating that, all else being equal, an increase in the price of a good will result in an increase in the quantity supplied.