Which of the Following Statements About the FIFO Cost Assumption

question 48

Multiple Choice

Which of the following statements about the FIFO cost assumption is true?

• A)The same costs per unit are assigned to the ending inventory and the cost of goods sold.
• B)Companies prefer to use FIFO because it lowers their tax liability.
• C)In times of rising prices FIFO will produce a higher net income than moving average.
• D)In time of rising prices FIFO produces an inventory cost per unit that is lower than the cost per unit of cost of goods sold.

---

Definitions:

Supply

The total amount of a product (goods and services) available for purchase at any specified price.

Single Tax

A fiscal policy advocating for a sole tax to be levied on a single source, often proposed as a tax on land value.

Economic Rents

Payments to a factor of production in excess of the cost needed to bring that factor into production.

Land Ownership

The legal right to possess, use, and control land.