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.

---

Definitions:

Psychological Reactance Theory

A theory which proposes that people value thinking and acting freely. Therefore, situations that threaten their freedom arouse discomfort and prompt efforts to restore freedom.

Regulatory Focus Theory

The theory proposing that individuals regulate their behavior via two distinct systems: promotion focus (pursuit of goals and aspirations) and prevention focus (avoidance of negative outcomes).

Elaboration Likelihood Model

A theory in social psychology that explains the different ways people process persuasive messages, either through careful thought and evaluation or more automatic responses.

Promotion Focus

A general tendency to think and act in ways oriented toward the approach of positive outcomes.