Identify Which Inventory Costing Method (LIFO or FIFO) Achieves the Effect

question 98

Multiple Choice

Identify which inventory costing method (LIFO or FIFO) achieves the effect listed in the following items:
-Prices are rising; profits are higher with this method.

• A)LIFO
• B)FIFO

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Definitions:

Multiple Rates Of Return

One potential problem in using the Internal Rate of Return method if more than one discount rate makes the Net Present Value of an investment zero.

Net Present Value

A process that evaluates how the worth of a dollar now compares to its worth in the future, factoring in both inflation and investment returns.

Discount Rate

This is the rate of interest utilized in discounted cash flow analysis to calculate the current worth of future cash flows.

Investment

The process of distributing assets, typically funds, with the aim of earning a return or profit.