When a Firm Uses the LIFO Inventory Cost Flow Assumption

question 10

Multiple Choice

When a firm uses the LIFO inventory cost flow assumption:

• A)ending inventory will be greater than if FIFO were used.
• B)net income will be greater than if FIFO were used.
• C)cost of goods sold will be the same as if FIFO were used.
• D)better matching of revenue and expense is achieved than under FIFO.

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Definitions:

Promoters

Individuals or companies that undertake the preliminary activities of organizing or setting up a new business or venture.

Preincorporation Contract

An agreement made by the promoters of a company before it is legally incorporated.

Liable

Having legal responsibility or obligation.

Articles of Incorporation

A document filed with a state government to legally document the creation of a corporation.