Which of the Following Statements About the Use of the FIFO

question 5

Multiple Choice

Which of the following statements about the use of the FIFO assumption is NOT true?

• A) The FIFO assumption assigns the more recent purchase costs to the balance sheet inventory asset account.
• B) The FIFO assumption is not affected by the inventory control method.
• C) In periods of rising prices it produces a higher profit than LIFO.
• D) The FIFO assumption produces inventory asset values that are based on older purchase costs.

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Definitions:

Net Operating Income

A company's revenue minus its operating expenses, excluding taxes and interest, indicating the profitability of its core business activities.

Sales Volume

The total number of units or products sold within a specific period.

Fixed Expense

Overheads that stay the same, no matter how much is produced or sold, encompassing charges such as property rent, staff paychecks, and insurance coverage costs.

Break-Even

Break-even refers to the point at which total costs and total revenues are exactly equal, resulting in neither profit nor loss.