Which of the Following Would Not Be a Reasonable Conclusion

question 52

Multiple Choice

Which of the following would not be a reasonable conclusion when comparing lifo-fifo under an inflationary condition?

• A) Lifo generally results in a lower profit than does fifo.
• B) Fifo reports a higher inventory ending balance.
• C) Lifo results in a lower profit figure than does fifo.
• D) Lifo would probably be used for inventory that has a high turnover rate because there would be an immaterial difference in the results between lifo and fifo.
• E) The cash flow under lifo is greater than the cash flow under fifo by the difference in the resulting tax between the two methods.

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Definitions:

Inventory

A complete list of items such as property, goods in stock, or the contents of a building.

Regular Price

The standard selling price of a product or service without any discounts, promotions, or special offers.

Manufacturer's Suggested

Retail price recommendation provided by manufacturers to retailers, suggesting the price point at which a product should be sold to consumers.

Bulk Order

A large quantity of goods purchased at one time, often at a discounted rate.