Which of the Following Statements Regarding Inventory Costing Methods Is

question 32

Multiple Choice

Which of the following statements regarding inventory costing methods is true?

• A)The LIFO method assumes that the costs for the newest goods (the last ones in)are used first and the older costs are left in ending inventory.
• B)During a period of rising prices,LIFO results in a higher income tax expense than does FIFO.
• C)International Financial Reporting Standards (IFRS)allow the use of LIFO but not FIFO.
• D)In the U.S. ,if a company uses LIFO on the income tax return,it may use a different method for financial reporting.

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Definitions:

Construct Validity

The extent to which a test measures what it claims to be measuring, ensuring the accuracy of the theoretical concept it intends to reflect.

Internal Validity

The extent to which the results of a study are due to the manipulation of the independent variable and not other factors.

Causal Relationship

indicates a situation where one variable directly affects another variable, implying causation rather than just correlation.

Statistical Accuracy

The degree to which statistical estimates reflect the true value of the parameter being measured.