One of the Principal Reasons for Selecting the LIFO Cost

question 29

Multiple Choice

One of the principal reasons for selecting the LIFO cost flow assumption instead of the FIFO cost flow assumption in an inflationary economic environment is that:

• A)net income will be higher.
• B)income taxes will be lower.
• C)balance sheet inventory values will be higher.
• D)a higher selling price can be established.

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Definitions:

Encumber Goods

To place a burden or charge on goods, such as a lien or mortgage, that affects their use or transferability.

Title To Delivery

A legal concept indicating the transfer of ownership of goods from a seller to a buyer when specific conditions are met.

Small Business Loan

Financing specifically targeted to support the needs and growth of small and medium-sized enterprises, often provided with favorable terms.

Goods-In-Bailment

Items that are temporarily entrusted to another party (the bailee) for a specified purpose, under a bailment agreement, but ownership remains with the person who entrusts the goods (the bailor).