If the LIFO Reserve Increases During the Year, and Inventory

question 31

Multiple Choice

If the LIFO reserve increases during the year, and inventory costs are increasing, ________.

• A) cost of goods sold will be higher under FIFO than LIFO
• B) cost of goods sold will be higher under LIFO than FIFO
• C) the journal entry will debit LIFO Reserve
• D) the journal entry will credit Cost of Goods Sold

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Definitions:

Wine Producers

Businesses or individuals involved in the cultivation of grapes and the production and marketing of wine.

Tax Impact

The effect that taxation has on individual or corporate financial conditions.

Inelastic Demand

A situation where the demand for a product does not significantly change with a change in its price.

Elastic Supply

A situation where the quantity supplied of a good changes significantly as the price changes.