__________ Is a True Statement

question 56

Multiple Choice

__________ is a true statement.

• A) During periods of inflation,LIFO makes the balance sheet less representative of the actual inventory values than if FIFO were used
• B) During periods of inflation,FIFO makes the balance sheet less representative of actual inventory values than if LIFO were used
• C) After inflation ends,distortion due to LIFO will disappear as inventory is sold
• D) During periods of inflation,LIFO overstates earnings relative to FIFO
• E) None of these

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Definitions:

Average-Cost Method

An inventory costing method where the cost of goods sold and ending inventory are calculated using the average cost of all units available for sale during the period.

Merchandise Inventory

Goods and products held by a business for the purpose of resale to customers, forming a key current asset on the balance sheet.

FOB Shipping Point

Freight terms indicating that the seller places goods free on board the carrier, and the buyer pays the freight costs.

Freight Costs

The expenses associated with transporting goods from one location to another.