If a Company Experiences a Liquidation of a LIFO Inventory

question 10

Multiple Choice

If a company experiences a liquidation of a LIFO inventory layer in the second quarter that is expected to be restored by the end of the annual financial reporting period,the company should

• A)treat the layer as if it were liquidated and include in cost of goods sold the expected replacement cost of the inventory sold.
• B)deplete the LIFO layer as if the interim period were an annual period.
• C)change to an alternative inventory cost method, such as FIFO, so that the problem of LIFO liquidation is not encountered.
• D)delay the recognition of both revenue and cost of goods sold on the inventory involved until a final determination of the LIFO inventory can be made at the end of the annual period.

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Definitions:

Onset of Action

The time it takes after a drug is administered for it to produce its therapeutic effect.

Duration

The length of time that something lasts or continues.

Physiological Response

The natural, biological reactions of the body to internal or external stimuli, such as heart rate increase in response to stress or exercise.

Acetaminophen

A medication used to reduce fever and relieve pain. It's known for its analgesic and antipyretic properties and is available over-the-counter.