Which of the Following Statements Is True

question 80

Multiple Choice

Which of the following statements is true ?

• A) To maximize profits, a firm must maximize total revenue.
• B) In long-run equilibrium, a competitive firm produces at the point of minimum average total cost.
• C) In the short-run, a perfectly competitive firm produces where total cost is minimum.
• D) In the short-run, a perfectly competitive firm will close down whenever price is less than average total cost.

Comprehend the allocation of costs to ending inventory and cost of goods sold under FIFO and LIFO methods.

Understand the implications of the lower of cost or net realizable value rule on financial statements.

Identify the flow of goods from production to finished goods inventory.

Recognize the effects of inventory methods on income taxes.

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Definitions:

Malpractice Action

A legal action filed against a professional person for failure to act in accordance with prevailing professional standards.

Properly Perform

To execute or carry out a task or duty correctly, efficiently, and up to the expected standards or specifications.

Generally Accepted Accounting Principles

Generally Accepted Accounting Principles (GAAP) refer to a common set of accounting rules, standards, and procedures used in preparing financial statements in the United States.

Financial Accounting Standards Board

An independent nonprofit organization responsible for establishing accounting and financial reporting standards for companies and organizations in the United States.