A Firm Has Used LIFO for Several Years During Which

question 24

Multiple Choice

A firm has used LIFO for several years during which costs have trended higher. If this firm achieves a substantial reduction in inventory quantities in 2014 by selling more merchandise than it purchases, the effect on 2014 net income of the inventory reduction, compared to having no change in inventory quantity from the beginning to the end of 2014, is:

• A) net income for 2014 will be greater if the inventory quantity declines.
• B) net income for 2014 will be less if the inventory quantity declines.
• C) net income for 2014 will not be affected because of the inventory quantity decline.
• D) can't tell from the information given.

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Definitions:

Regular basis

A consistent, repeated interval at which activities or events occur, whether daily, weekly, monthly, or on a similarly predictable schedule.

Spending time

The allocation of one's duration towards various activities or tasks over a period.

Interact regularly

The continuous engagement or communication between individuals or entities in a consistent and repeated manner.

Physical location

A specific geographic place or position identified by its physical coordinates or characteristics.