Which of the Following Statements About LIFO Is False

question 65

Multiple Choice

Which of the following statements about LIFO is false?

• A)It results in a higher cost of goods sold during periods of rising prices.
• B)If inventory declines,it will result in a matching of current revenues and old costs
• C)The cost of ending inventory will probably be very different from current replacement cost.
• D)Firms that use LIFO run the risk of inventory obsolescence because they are keeping old goods on hand.

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Definitions:

Product Line

A series of related products offered by a company, often serving a common market or purpose.

Net Income

The amount of earnings left after all expenses and taxes have been deducted from total revenue.

Variable Expenses

Costs that vary directly with the level of production or sales volume.

Capital Budgeting

The process a business undertakes to evaluate potential major projects or investments, assessing their viability and profitability.