Johnston Controls Began Operation in 2017 Using FIFO Inventory Methods

question 53

Multiple Choice

Johnston Controls began operation in 2017 using FIFO inventory methods. In 2018, management decided they should have chosen LIFO to more accurately portray financial position and performance. The beginning 2018 inventory using FIFO was $200,000. Under the LIFO method the beginning inventory would have been $240,000. The adjustment to inventory for the accounting principle change for 2017 would be ________.

• A) $0
• B) $20,000 debit
• C) $40,000 credit
• D) $40,000 debit

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Definitions:

CPM Network

Critical Path Method Network, a project management tool that models tasks and their dependencies as a network to identify key deadlines and the longest stretch of dependent activities.

Predecessors

Refers to elements or tasks that must be completed before a certain task or element can begin in scheduling and project management.

Successor

An entity or individual that follows or comes after another in a specific role, position, or sequence.

Pessimistic Time

The “worst” activity time that could be expected in a PERT network.