Analysts Try to Remove Holding Gains from Reported FIFO Income

question 137

Multiple Choice

Analysts try to remove holding gains from reported FIFO income because

• A)the FEI's code of professional ethics requires that they do so if possible.
• B)holding gains understate management's true performance.
• C)they are potentially unsustainable.
• D)None of these is appropriate reasons for removing holding gains from reported FIFO income.

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Definitions:

Voucher Register

A record of vouchers, which are documents evidencing expenditure or the transfer of funds.

Book Of Vouchers

A ledger or book that contains vouchers, which are documents or files acting as evidence for transactions.

Gross Method

A method of recording purchases of inventory at their gross price without any deduction for trade discounts at the time of purchase.

Periodic Inventory Method

An accounting approach where inventory values and cost of goods sold are determined at the end of an accounting period through physical inventory counts.