Which of the Following Statements Is Not Valid as It

question 55

Multiple Choice

Which of the following statements is not valid as it applies to inventory costing methods?

• A) If inventory quantities are to be maintained, part of the earnings must be invested (plowed back) in inventories when FIFO is used during a period of rising prices.
• B) LIFO tends to smooth out the net income pattern by matching current cost of goods sold with current revenue, when inventories remain at constant quantities.
• C) When a firm using the LIFO method fails to maintain its usual inventory position (reduces stock on hand below customary levels), there may be a matching of old costs with current revenue.
• D) The use of FIFO permits some control by management over the amount of net income for a period through controlled purchases, which is not true with LIFO.

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Definitions:

Left Brain Hemisphere

The part of the brain that is often associated with logical reasoning, analytical thinking, and language processing.

Logic

Logic is the study of proper reasoning, especially in regard to its structure, validity, and the systematic methods for deducing truth.

Oral Rehydration Therapy

A simple, cost-effective treatment used to prevent dehydration due to diarrhea, involving the oral ingestion of a solution of salts and sugars.

Dehydration

A condition resulting from the excessive loss of water from the body.