In a Period of Rising Prices Which Inventory Method Generally

question 67

Multiple Choice

In a period of rising prices which inventory method generally provides the greatest amount of net income?

• A) Average-cost.
• B) FIFO.
• C) LISH.
• D) Cannot be determined.

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Definitions:

Economic Rents

Earnings exceeding the minimum amount necessary to keep a factor of production in its current use, often associated with imperfect competition or unique resources.

Land Ownership

The legal right to possess, use, and manage a piece of land.

Compound Interest

The accumulation of money that builds over time in an investment or interest-bearing account as new interest is earned on previous interest that is not withdrawn.

Savings Account

A deposit in a commercial bank or thrift institution on which interest payments are received; generally used for saving rather than daily transactions; a component of the M2 money supply.