Company a Uses Lifo and Company B Uses Fifo for Inventory

question 59

Multiple Choice

Company A uses lifo and Company B uses fifo for inventory valuation.Otherwise, the firms are of similar size and have the same revenue and expense.Assume inflation.In analyzing liquidity and profitability of the two firms, which of the following will hold true?

• A) It is impossible to compare two firms with different inventory methods.
• B) Company B will have relatively higher profit and higher inventory turnover.
• C) Company B will have relatively higher profit and lower inventory turnover.
• D) Company A will have a higher current ratio and acid test ratio, with the same profit.
• E) Company B will have relatively higher profit and a higher current ratio.

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Definitions:

Survey Respondents

Individuals who answer or provide data in response to questions posed in a survey, which can be used for research or polling purposes.

Margin Of Error

The amount of inaccuracy allowed in the results of a survey or poll, often expressed as a percentage.

Public Opinion Survey

A method used to measure the opinions or attitudes of a population regarding specific issues or policies.

Simple Random Sample

A sampling method where each member of a population has an equal chance of being selected, ensuring that the sample represents the population accurately.