In Periods of Rising Prices, Which Is an Advantage of Using

question 162

Multiple Choice

In periods of rising prices, which is an advantage of using the LIFO inventory costing method?

• A)Ending inventory will include latest (most recent) costs and thus be more realistic.
• B)Cost of goods sold will include the latest (most recent) costs and thus will be more realistic.
• C)Net income will be the highest and thus reflect the prosperity of the company.
• D)Phantom profits are reported.

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Definitions:

Substantial Unemployment

A situation where there is a significantly high rate of unemployment in a particular area, reflecting a large number of people unable to find jobs.

Wages

Compensation paid to employees for their labor or services, typically calculated on an hourly, daily, or piecework basis.

Great Depression

A severe worldwide economic downturn that took place mostly during the 1930s, leading to high unemployment, low output, and deflation.

Curve

In economics, a curve often represents graphical data showing relationships between two variables, such as supply and demand or price and quantity.