The Use of LIFO in Accounting for a Firm's Inventory

question 21

Multiple Choice

The use of LIFO in accounting for a firm's inventory:

• A) Usually matches the physical flow of goods through the business.
• B) Is usually used for internal management purposes.
• C) Usually provides a better match of expenses with revenues.
• D) None of these answer choices are correct.

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Definitions:

Reporting Entity Concept

An accounting principle that states only entities that impact the economic decisions of users by providing relevant and reliable financial information should prepare and present financial statements.

Controlled Group

A group of two or more entities that are connected through common ownership, allowing for centralized control and management.

Controlled Entities

These are entities over which another entity (the parent) has control, typically through ownership of more than half of the voting rights or through other mechanisms.