Based on Your Answers to Questions 6 and 7, Which

question 20

Multiple Choice

Based on your answers to Questions 6 and 7, which of the following is a disadvantage of using the IFRS FIFO method, as compared to Average-cost under U.S. GAAP?

• A) Under FIFO, during periods of inflation, inventory costs matched against sales are lower than the inventory replacement cost.
• B) When price levels increase and inventory quantities do not decrease, taxes are greater under FIFO
• C) FIFO may cause poorer buying habits as management attempts to manipulate net income.
• D) FIFO typically causes lower reported earnings.