Baker Company Has Been Using the LIFO Method of Inventory

question 72

Multiple Choice

Baker Company has been using the LIFO method of inventory valuation for 10 years, since it began operations.Its 2007 ending inventory was $40,000, but it would have been $60,000 if FIFO had been used.Thus, if FIFO had been used, Baker's income before income taxes would have been

• A)$20,000 greater over the 10-year period.
• B)$20,000 less over the 10-year period.
• C)$20,000 greater in 2007.
• D)$20,000 less in 2007.

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Definitions:

Matrimony

The state of being married, also referred to as the institution of marriage.

Civil Unions

A legally recognized union of a couple, similar to marriage, which provides some but not all the rights and responsibilities of marriage under the law.

Same-sex Couples

Romantic or marital relationships between two individuals of the same gender.

Exchange of Property

The act of giving something of value to someone else in return for another item or service.