The Term LIFO Reserve Refers to

question 119

Multiple Choice

The term LIFO reserve refers to

• A) a cost flow assumption for valuing inventory.
• B) a special fund set aside to cover LIFO liquidations.
• C) inventory pools used in the dollar-value LIFO method.
• D) the difference between the ending inventory amount under LIFO and the ending inventory amount under another inventory cost flow assumption.

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Definitions:

Fixed Cost

Expenses that do not change with the level of goods or services produced by a business, such as rent or salaries.

Variable Cost

Costs that change in proportion to the level of goods or services that a business produces.

Fixed Cost

Expenses that do not change in total regardless of the level of output or activity in a business, such as rent, salaries, and loan payments.

Dynamic Pricing

A pricing tactic that involves constantly updating prices to reflect changes in supply, demand, or market conditions.