Companies Using the LIFO Method May Encounter a Liquidation of Base

question 42

Multiple Choice

Companies using the LIFO method may encounter a liquidation of base period inventories at an interim date that is expected to be replaced by the end of the year. In these cases, cost of goods sold should be charged with the:

• A) cost of the most recent purchases.
• B) average cost of the liquidated LIFO base.
• C) expected replacement cost of the liquidated LIFO base.
• D) none of these.

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Definitions:

Linguistic Intergroup Bias

A tendency to describe stereotypic behaviors (positive ingroup and negative outgroup) in abstractterms while describing counterstereotypic behaviors (negative ingroup and positive outgroup) inconcrete terms.

Counterstereotypic Behaviors

Actions or behaviors that go against common stereotypes or societal expectations associated with a particular group.

Stereotypic Behaviors

Repetitive or ritualistic movements, postures, or utterances, often indicative of anxiety, stress, or developmental conditions.

Outgroup Homogeneity Effect

The tendency to view members of an outgroup as more similar to each other than members of one's ingroup.