Similar to the Example of FIFO and LIFO Inventory Accounting

question 219

Multiple Choice

Similar to the example of FIFO and LIFO inventory accounting methods depicted in the Spotlight on Small Business box titled,"What's Coming and Going at the College Bookstore?" a college store purchased sweatshirts for the upcoming fall semester.Using the following data,where a total of 100 sweatshirts were purchased by the store and placed in inventory,select the correct statement from the following choices.

• A)FIFO would provide the least profit.
• B)FIFO would provide the most profit.
• C)LIFO or FIFO will produce the same amount of profit.
• D)LIFO would provide the most profit.

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Definitions:

Periodic Net Income

The profit or loss reported by a company at the end of a specific accounting period, reflecting all revenues and expenses.

Trading Securities

Financial assets that a company buys and sells with the intention of making a profit in the short term.

Debt Securities

Notes and bond investments that provide interest revenue over a fixed maturity.

Equity Securities

The common and preferred stock of a firm.