During Periods of Inflation, the Use of FIFO (Rather Than

question 38

Multiple Choice

During periods of inflation, the use of FIFO (rather than LIFO) as the method of accounting for inventories causes

• A)higher reported sales.
• B)higher incomes taxes.
• C)lower ending inventory.
• D)higher incomes taxes and lower ending inventory.
• E)None of the options

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Definitions:

Price Decreases

A reduction in the cost at which goods and services are sold, typically influencing demand.

Marginal Utility

The additional satisfaction or utility a consumer gains from consuming one more unit of a good or service.

Video Game Rental

A service that allows consumers to borrow video games for a limited period of time for a fee.

Total Utility

The total satisfaction a product yields.