A Change in the Method of Inventory Pricing from FIFO

question 13

Multiple Choice

A change in the method of inventory pricing from FIFO to LIFO would be accounted for as a (an) :

• A) Part of discontinued operations
• B) Part of gross profit
• C) Change in accounting principle
• D) Change in estimate.

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Definitions:

Depreciation Expense

The method by which the cost of a tangible or physical asset is allocated over its useful life.

Building

The physical structure intended for housing, manufacturing, or any other commercial or industrial activity.

Electric Bill

A periodic charge for the use of electrical energy provided by a utility company or supplier.

Understated Assets

Occurs when the book value of assets is reported at less than their actual value on the financial statements, potentially misleading stakeholders.