The Accountant at Almira Company Is Figuring Out the Difference

question 59

Multiple Choice

The accountant at Almira Company is figuring out the difference in income taxes the company will pay depending on the choice of either FIFO or LIFO as an inventory costing method. The tax rate is 30% and the FIFO method will result in income before taxes of $8,190. The LIFO method will result in income before taxes of $7,290. What is the difference in tax that would be paid between the two methods?

• A) $270.
• B) $630.
• C) $900.
• D) Cannot be determined from the information provided.

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Definitions:

Parasympathetic Nervous System

Part of the autonomic nervous system responsible for conserving energy by slowing the heart rate and increasing intestinal and gland activity.

Autonomic Nervous System

The part of the nervous system responsible for control of bodily functions not consciously directed, such as breathing, the heartbeat, and digestive processes.

Somatic

Pertaining to or affecting the body, particularly as distinguished from the mind or psyche.

Spinal Cord

The cylindrical bundle of nerve fibers and associated tissue that is enclosed in the spine and connects nearly all parts of the body to the brain, forming the central nervous system.