All of the Following Are Reasons for Choosing the FIFO

question 68

Multiple Choice

All of the following are reasons for choosing the FIFO versus the LIFO costing method EXCEPT:

• A)FIFO reports the most up- to- date inventory values on the balance sheet.
• B)FIFO uses more current costs in calculating the value of ending inventory.
• C)FIFO generally results in higher income taxes paid.
• D)FIFO is generally more conservative.

---

Definitions:

Internal Rate Of Return

A financial metric used to estimate the profitability of potential investments, calculating the interest rate at which the net present value of all the cash flows (both positive and negative) from a project or investment equals zero.

Project's Cash Flows

The inflows and outflows of cash associated with a specific project, considered in its financial analysis.

Reinvested

Pertains to the act of putting earnings or profits back into the business or project instead of paying them out as dividends.

Discount Rate

The interest rate used to discount future cash flows to their present value, reflecting the opportunity cost of capital.